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February 2020Boosting Performance in a Changing Environment

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Summary

key uncertainties resolved in a positive way: the Big Achievements

low price market

low gearing

focused pipeline of projects to take advantage of new opportunities

spending management

Well-positioned to benefit from changing

environment

Pulling levers to manage through gas

price downturn

Balancing act between growth

and profitability

lower operating expenditure

capital discipline

transformation activities

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Naftogaz at a glance, 2019

78% share in total gas production in Ukraine

89.6 bcmgas transit viaUkrainian GTS

Gas imports by the group

7.2 bcm

7%contribution to Ukraine’s GDP

Royalty paid by the group

UAH 32.2 bn55,078employees

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Macroeconomic stabilization supports Ukraine’s growthKey macroeconomic indices in Ukraine

131

87.5 92.3113 131

150

24.9

43.3

12.4 13.7 9.84.1

15.8

24.0 27.1 28.2 27.723.7

Inflation, %GDP growth, USD bn

UAH/USD exchange rate

2019 2014 2015 2016 2017 2018

2019E2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018

NBU interest rate, %

2019 2016 2017 2018

22.0

15.512.5

16.018.0 18.0

16.5

11.0

Sources: Ukrstat, NBU, IMF

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Naftogaz: key figuresFinancial Highlights, UAH (mln) FY 2017 FY 2018 FY 2019 (1)

Revenues 227,478 256,312 218,545Operating profit 60,545 26,397 86,044Adjusted EBITDA(2) 83,945 87,497 62,261CAPEX 16,995 30,595 33,565Total Assets 723,124 603,712 598,048Cash position 23,093 14,224 78,016Net Debt/Adjusted EBITDA 0.43 0.48 0.68 (3)

bcm

15.5 14.9

1.11.2

16.616.1

2018 2019

Ukrnafta Ukrgasvydobuvannya Total

Gross Gas Production Volumes(1) These are preliminary unaudited results of the Group’s operations

for 2019. These results include Gas Transit and Gas Transmission results that will be shown as discontinued operations. Final audited results could differ significantly from the figures stated above.

(2) Adjusted EBITDA is net profit/(loss) for the period, adjusted to exclude the effects of income tax expense/(benefit), finance costs, finance income, share of after-tax results of associates and joint-ventures, net foreign exchange loss, depreciation, depletion, and amortization, impairment of property, plant and equipment, provisions, and non-refundable VAT, arbitration income, and arbitration expense recognised as a result of the Gas Transit and Sales Arbitration

(3) Net Debt/Adjusted EBITDA for 2019 is calculated as Total Debt less Cash (adjusted for cash received in December 2019 per results of transit arbitration).

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2017 2018 2019F

2017 2018 2019F

2017 2018 2019F

Integrated gas is the key part of Naftogaz business following the unbundling

227.62017

Revenues

256.42018

218.52019F

83.92017

87.52018

62.32019F

Adjusted EBITDA

CAPEX

17.02017

30.62018

33.62019F

Integrated gas

89.1 108.5 90.2

39.1 43.933.4

13.724.7 26.9

Gas transit and gas domestic transmission

Other segments and unallocated items

2017 2018 2019F

2017 2018 2019F

2017 2018 2019F

2017 2018 2019F

2017 2018 2019F 2017 2018 2019F

98.7 97.2

87.0 39.8 50.7 41.3

41.4 36.326.8

3.4

7.3

2.1

1.82.8

2.2 1.5

3.14.5

UAH bn

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Ukraine’s gas market is half-way through to full liberalization

billion cubic meters (bcm)

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Traders boosted gas reserves anticipating gas transit interruption

Sources: Naftogaz and Ukrtransgaz

billion cubic meters (bcm)

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Gas transit deal removed risks and created price pressure

Gazprom’s gas exports, mcm/d

Sources: pipeline operators; TurkStream – estimated; eegas.com, Powernext

Three main routes delivered just 9.72 bcmin January

Gas price at TTF, EUR/Mwh

-25%

TurkStreamdelivered 1 bcm+ to Turkey and Bulgaria

European gas demand fell due to warm weather and withdrawals from UGS instead of pipeline exports

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Extra gas in Ukraine’s storages creates additional price pressure and opportunities

Gas stocks in Ukraine’s UGS facilities, bcm

0

2

4

6

8

10

12

14

16

18

20

21

13.814.7

16.219.02.20

21.901.11.19

10.219.02.19

17.201.11.18

Oct Nov DecJan Feb Jan FebMar Apr May Jun Jul Aug Seputg.ua

Historic low

Heating season 2018/2019

Heating season 2019/2020

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Important achievements:positive arbitration outcome

$2.1 bn

$2.9 bn

Compensation from Gazprom, incl. interest

─ compensation received through offset in February 2018

+over $80 bn of Gazprom’s claims

to Naftogaz fully dismissed

─ compensation received in cash in December 2019 following attachment of Gazprom’s assets in EU

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2020 2021 2022 2023 2024

6540 40 40bcmbcm bcm bcm bcm

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Important achievements: unbundling and gas transit deal

Transit deal: stable revenues, cost reduction, more security

No gas war occurred

Guaranteed transit revenues in 2020-2024 thanks to ship-or-pay clause

Gas prices collapsed by 25% over 1.5 months

Gas transmission tariffs decreased by 2-4 times for Ukrainian consumers

Ukraine is now directly connected with EU gas network

minimum

$7.2bn

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Priorities going forward: operating efficiency

Pulling levers to manage through gas price downturn

Lower operating expenditure

Capital discipline

Transformation activities

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Naftogaz is well positioned with low gearing

(*) Total pledge of assets (gas in storage) and proceeds from future sales – USD 2.2 bln

Weighted Average Interest Rate

Total Debt, $bn

Debt Structure, February 2020

8%

7%

17%

0% 5% 10% 15% 20%

USD

EUR

UAH

Eurobonds

300 199 469 65 1041 0 500

300 199 134 65 371 1069

335 669 500 1504

2020 2021 2022 2023 2024 2025 2026

Debt Repayment 2020-26

State-owned banks

Total, in $mn

0

1

2

3

FY 2016 FY 2017 FY 2018 FY 2019

Unsecured$1.5bn

60%

Secured$1.0bn

40%

2.62.1 2.0

2.5

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Upstream: focused brownfield strategy, new opportunities

Brownfield redevelopment

Unconventional resources

New exploration

effort

Naftogaz objectives Partnership considerations

Maximize value of depleted brownfield reserves

Optimize costs and increase profitability

Develop evaluation criteria for cost efficiency and brownfield performance

Partner requirements – proven track record, operational efficiency, excellence, willingness to invest

Contract type – Production Enhancement (PEC)

Commercialize Naftogaz' and Ukraine's tight gas resources

Efficiently scale up Build technological capability

Partner requirements – proven track record, technological excellence, readiness and ability to scale in Ukraine

Contract type –Risk Service Contracts (RSC)

Share risks and invest in resource base development

Ensure sustainable production increase through greenfield development

Optimize capital commitment Build exploration capacity

Partner requirements – proven track record, significant capital exposure, readiness to scale up in Ukraine

Contract type – Production Sharing Agreement (PSA)

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2

3

Status

Announced competition for two UGV deposit clusters in the Western region; participant qualification stage

UGV acquired 4 greenfield sites, 2 of which will be developed by Vermilion (Canada); draft agreements submitted to CMU

Preparing tender documentation; looking for partners

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Naftogaz prioritizes UN Sustainable Development Goals

compliance with OECD principles majority of Supervisory

Board Members are independent directors 0 tolerance to

corruption

Environmental Social Governance

reasonable natural resource management negative impact

reduction energy efficiency

& renewables footprints disclosure

and reporting biodiversity responsible

procurement

educational projects enhanced

environmental and health safety infrastructure

maintenance contribution to local

budgets through royalty

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EBRD supported and supervised corporate governance reform in Naftogaz

Supervisory Board with a majority of independent members in place is yet to be fully empowered with authority to:

Approve strategy Approve financial plans Appoint and remove Executive Board members

Clare SpottiswoodeChair, Independent director

Bruno LescoeurIndependent director

Amos HochsteinIndependent director

Ludo Van der HeydenIndependent director

Yuliia KovalivState representative

Nataliya BoykoState representative

Supervisory Board Members

2/3 of the Board are independent members

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121UAH bn2019

14%

2014

-97

-33

74

41

-53

110

57

-56

139

82

121

69

-30-17

48

1

-15

-87

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2015 2016 2017 2018 2019

+163

-52

Naftogaz is the largest net contributor to the state budget

From the ‘black hole’ to the biggestpayer of taxes and dividends for the state as the sole shareholder

POSITIVE EFFECT ONTHE STATE BUDGET,UAH bn

of revenues to the state budget in 2019

Every seventh hryvnia was contributed by Naftogaz

Taxes and dividends paid to the state budget by NaftogazDirect subsidies provided by the government to low-income consumersRecapitalization of Naftogaz from the state budget

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NAFTOGAZ GROUPir@naftogaz.com

+380 44 586 3537www.naftogaz.com @NaftogazUkraine