Volga Gas plc
Annual Report  
and Accounts
For the year ended  
31 December 2010
2010 Contents
Business Overview
IFC Review of 2010
01 Volga at a Glance
02 Chairman’s Statement
03 Chief Executive’s Report
04 Operational Review
06 Financial Review
08 Risk Factors
Corporate Governance
10 Board of Directors
12 Corporate Governance Statement
14 Report of the Directors
17 Directors’ Remuneration Report
Financial Statements
19 Independent Auditors’ Report
20 Group Income Statement
20 Group Statement of  
Comprehensive Income
21 Group Balance Sheet
22 Group Cash Flow Statement
23 Company Balance Sheet
24 Company Cash Flow Statement
25 Group and Company Statements  
of Changes in Shareholders’ Equity
26 Notes to the IFRS Consolidated  
Financial Statements
44 Notice of Meeting
46 Glossary of Technical Terms
48 Russian Classification of Reserves
IBC Corporate Directory
Front cover image: Jacques Descloitres, MODIS Land Rapid Response Team
Review of 2010
Volga Gas plc is an independent oil and gas 
exploration and production company focused 
on the Volga Region of Russia. It has offices 
in London, Moscow and Saratov and has 
100% interests in four oil and gas exploration 
and production licences in the Saratov and 
Volgograd regions.
Steady production from the supra-salt 
Uzenskoye oil field in the Karpenskiy 
Licence Area
Sub salt exploration drilling at  
Grafovskaya #1 completed but  
not commercially successful
Successful extended production testing  
on the Vostochny Makarovskoye gas/
condensate field
Combined Russian classification C1/C2 
recoverable reserves of 67 .3 million barrels  
of oil equivalent on Uzenskoye and 
Vostochny Makarovskoye
Revenues of US$13.1 million in 2010,  
positive EBITDA and positive operating  
cash flow maintained
Year end cash and deposits of  
US$26.6 million and no debt Financial Statements Corporate Governance Business Overview
Annual Report and Accounts 2010_ 01
Our assets are located in an established oil and gas 
province. The area benefits from the existing rail, road  
and pipeline infrastructure and proximity to Russia’s  
main energy markets.
Continued steady production from the Uzenskoye field enabled 
the Company to maintain positive operating cash flow and 
EBITDA in 2010. With eventual completion of the Vostochny 
Makarovskoye project and further potential developments,  
the Company targets further growth in production in the short 
and medium term. 
Volga at a Glance
2010 progress 2011 objectives
Karpenskiy ( Sub-Salt) 1. 
Grafovskaya #1 reached total depth of 5,379 metres in   –
April 2010.
Five flow tests conducted on potential hydrocarbon bearing  –
zones but no commercial flow rates were established.
Data from Grafovskaya #1 to be used for evaluation of further  –
possible sub-salt exploration.
Karpenksiy (Supra-Salt) 2. 
Second year of production, averaging 1,116 barrels of oil   –
per day (2009: 1,267 bopd).
Russian C1/C2 reserves of 13.5 mmbbl with 32% upgrade   –
of C1 reserves to 9.7 mmbbl.
Maintain/enhance production profile and maximise   –
extraction of oil.
Drill new production well. –
Vostochny Makarovskoye 3. 
First two development wells successfully placed on extended  –
test production.
Negotiations with Trans Nafta on gas processing unit. –
Complete acquisition of gas processing unit. –
Install sulphur treatment unit. –
Continue test production and prepare for full scale field  –
production from Vostochny Makarovskoye.
Pre-Caspian Licence Area 4. 
Geological studies and interpretation of 3-D seismic data. – Selection of a suitable exploration target to meet exploration  –
drilling commitment by end of 2011.
Urozhainoye-2 Licence Area 5. 
Preparation for drilling of a commitment well. – Drill an exploration well close to an existing oil discovery well. – 02_Annual Report and Accounts 2010
We believe that Volga Gas has a strong 
asset base and the financial and operational 
capability to develop and extend these 
to provide long term value growth for 
our shareholders.
2010 has been a year of transition for Volga Gas. The 
production side of the business performed well and enabled 
the Group to continue generating positive net operating  
cash flow and to maintain a strong financial position with 
US$26.6 million of net cash. In addition, the Group has 
significant proven reserves in its two principal fields,  
which form the basis of a rising profile of future production. 
Our fields are advantageously located and our costs are 
sufficiently low for us to achieve good returns at oil and  
gas prices significantly lower than those we currently 
enjoy. Most importantly, we have fulfilled our licence 
commitments on the Karpenskiy and Vostochny 
Makarovskoye licences and have sufficient funds  
to meet the commitments due in other licence areas.
During 2010 drilling of the Group’s first deep sub-salt exploration 
well was completed and the well was subjected to a series of 
flow tests. Unfortunately, although there were five zones in the 
well with indications of hydrocarbons, no commercial flow rates 
were achieved.
Whilst this result is clearly a disappointment, it had no impact  
on our existing reserves or on our other exploration targets.  
The Group has identified material exploration targets within 
existing acreage that can be tested at low cost. These will form 
the short-term focus of activity. In addition, the deeper sub-salt 
potential of the area remains untested in other parts of the 
licence areas, on which, based on the knowledge gained from 
our first well we may consider further sub-salt drilling in the future.
On the Vostochny Makarovskoye (“VM”) field, we continued to deal 
with the legal and commercial matters that have so far delayed 
the development. Much of the physical infrastructure for VM is in 
place and the initial wells are ready for production. In fact, the 
wells have been placed successfully on long-term test production.
As stated in previous Annual Reports, Volga Gas had planned  
to acquire a 75% interest in a gas processing unit (“GPU”) built 
by Trans Nafta 5km from the VM licence area. After a lengthy 
but successful legal process over the last two years, we now 
appear to be reaching a conclusion which will result in Volga 
Gas acquiring the gas processing unit and other assets from 
Trans Nafta. We hope for a timely resolution of this matter and 
to move on to start production from the VM field.
Outlook and strategy
During 2011, the strategic priority of the Group will be to make 
significant progress towards full commercial operation of the 
VM field. The Board is also evaluating opportunities to extend 
the Group’s activities into new areas, where we have identified 
the potential to add significant value and incremental  
production volumes.
The Board believes that Volga Gas has a strong asset base and 
the financial and operational capability to develop and extend 
these to provide long term value growth for our shareholders.
Alexey Kalinin
Chairman
Chairman’s Statement
Volga Gas plc
Storage tanks at the 
Uzenskoye field Annual Report and Accounts 2010_ 03
Business Overview Corporate Governance Financial Statements
During 2010, Volga Gas benefited from the successful 
development of the Yuzhny Uzenskoye field which has 
provided and continues to provide valuable and profitable 
oil production, enabling the Group to report increased 
revenues and gross profits. We also made good advances 
on the development of the Vostochny Makarovskoye (“VM”) 
gas-condensate field, with a successful extended production 
test on the two initial wells. In the course of the year, we also 
identified a new material and relatively low cost exploration 
target within the Karpenskiy Licence Area which could 
materially add to the Group’s oil and gas reserves.
The major event of 2010 was, however, the testing of the 
Grafovskaya #1 sub-salt exploration well. As I explain in the 
Operational Report below, this was, regrettably, unsuccessful. 
Our disappointment is partly offset by the fact that the operations 
were conducted without incident and within budgeted cost and 
provided useful geological data which we can use across our other 
sub-salt licence areas. Nevertheless, this well was the culmination 
of significant investment over the past three years and, based 
on the results of the well, we feel it is prudent to recognise 
substantially all of this investment as impaired. As detailed in the 
Financial Report below, this has led to an exploration expense 
of US$23.9 million in the 2010 Income Statement.
Following this result, we have decided for the time being to focus 
the Group’s efforts and investment on the development of our 
proven reserves and on exploration activity in shallow horizons 
where we have already had some success.
One of our key objectives now is to bring the VM field into 
production. Much of the development work has been 
accomplished. We completed two production wells and 
installed intra-field pipelines in 2009, and during the second  
half of 2010 we successfully conducted extended production 
tests on these two wells.
Following the conclusion of the legal processes and subject  
to the settlement under negotiation as mentioned above in the 
Chairman’s Statement, we anticipate being able to move in a 
timely manner towards first production from the VM field. In 2007 
and early 2008 construction was commenced of a suitably scaled 
processing facility for the VM field but was put on hold in 
November 2008. Certain parts (including an H
2
S processing unit) 
of this facility will need to be relocated to the Dobrinskoye gas 
processing unit (“GPU”) site and further upgrades undertaken to 
the GPU to enable production to commence from the VM field. 
Our aim is to achieve this before the end of 2011.
Current trading
Since the beginning of 2011, oil production from the Uzenskoye 
field has been steady at approximately 1,300 bopd. We have so 
far not experienced any significant weather-related disruptions 
which impacted our oil production early in 2010. With oil sale 
prices having increased further since the start of the year and 
costs remaining relatively low, Volga Gas continues to enjoy 
positive net operating cash flow.
Outlook
Key activities for 2011 will include ongoing management and 
development of existing production. The Group’s priority is to 
bring the VM field into production as soon as possible after the 
commercial and legal matters with Trans Nafta have been resolved. 
Drilling activity in 2011 comprises an exploration well on the 
Urozhainoy-2 Licence Area, and a development well on the 
Uzenskoye oil field. The budgeted cost of these two wells is 
US$5.5 million.
Certain fiscal changes have been included in draft legislation  
in Russia. These include proposals that would substantially 
reduce the tax burden on small oil fields. Based on current draft 
legislation, we anticipate the Uzenskoye field may benefit from 
these anticipated changes.
We look forward to delivering a successful new stream of 
production and to pursuing the other growth opportunities  
that we see for the business.
Mikhail Ivanov
Chief Executive Officer
We look forward to delivering a successful 
new stream of production and to pursuing 
the other growth opportunities that we see 
for the business.
Chief Executive’s Report 04_Annual Report and Accounts 2010
Operations overview
The Group’s principal activities in 2010 were: completion of  
the drilling of the Grafovskaya #1 sub-salt exploration well and 
subsequent testing operations and the commencement of 
extended test production on the Vostochny Makarovskoye 
gas-condensate field. On the Uzenskoye supra-salt oil field the 
Group continued to manage production from the wells drilled in 
2008 and 2009 leading to steady production that provides the 
Group with a valuable source of cash generation which has 
enabled Volga Gas to remain cash flow positive.
The Group’s Russian category C1 and C2 recoverable oil, gas 
and condensate reserves, as approved by the State Committee 
for Reserves, total 67.3 million barrels of oil equivalent (2009: 
67.7 mmboe) taking into account production of 0.4 mmbbl during 
2010. The reserves are presented in detail in the table below. 
The changes from the previous year reflect volumes of oil 
produced and a reclassification of certain C2 category reserves  
into C1 category.
Karpenskiy Licence Area
Early in 2008 we amended the terms of the Karpenskiy Licence 
Area (“KLA”), thereby resolving certain licence breaches the Group 
inherited when it acquired the licence from a LUKOIL subsidiary. 
The amended licence agreement required the Group to finalise 
the acquisition of 400km
2
 of 3-D seismic and drill a further ten 
exploration or production wells over the following two years.  
The drilling of the Grafovskaya #1 sub-salt well completed the 
exploration commitments on the KLA.
Sub-salt exploration
In April 2010 the Grafovskaya #1 sub-salt exploration well reached 
a total depth of 5,379 metres and a full string of casing was set. 
The drilling rig was demobilised and a lower cost workover rig 
mobilised to the well site, to undertake a series of tests on the 
well. The testing programme involved perforation, acid treatment 
and flow testing in a sequence of five horizons starting from the 
deepest and working up to the shallowest. While strong shows 
of hydrocarbons were found in three of the tested intervals and 
some flow to surface was recorded, the rates were deemed to 
be sub-commercial.
The test results were clearly a disappointment. However, we were 
pleased with the operational management of the well which was 
drilled and tested safely, on time and within budgeted cost.
The data gathered from the well will be used to help refine our 
understanding of the sub-salt potential of other areas of our 
licences. While we continue to believe in the potential for 
significant oil and gas reserves in the sub-salt horizons of our 
licences, for the time being, our exploration activity will concentrate 
on lower cost shallow targets with which we have had some 
success already.
Supra-salt exploration
In April 2010 we disclosed that following analysis of 3-D seismic 
data, C3 prospective resources had been calculated on a  
supra-salt and intra-salt structure on the Yuzhny Mokrousovskoye 
area in the northern portion of the KLA. The C3 resources 
associated with this total 153 million barrels of oil equivalent 
representing a potentially material increment to Volga Gas’ 
reserves should a discovery of this size be made. 
Supra-salt production
Having completed the first phase of development drilling in 2009, 
during 2010, the main focus was on managing production from 
the five active wells on the Yuzhny Uzenskoye oil field.
During the months of March and April 2010, heavy snow falls 
followed by the subsequent thaw led to significant disruptions  
to transportation by the purchasers of our oil which is collected 
directly from the field site. Consequently, there were periods 
during which the wells were temporarily shut-in. When the wells 
were re-opened, it was discovered that the reservoir pressure 
had significantly increased. This indicates that there is an active 
water drive in the Yuzhny Uzenskoye field and that for the time 
being, water injection into the field will not be required.
The Yuzhny Uzenskoye field, whilst of modest scale, is very 
profitable to the Group. It was developed at a cost of US$1.91 
per barrel of C1 reserves and benefits from very low production 
costs, averaging US$1.07 per barrel (2009: US$0.71 per barrel). 
In addition as the oil is sold directly at the field facilities, the  
field bears no oil transportation costs. Details of the financial 
performance are in the Financial Review below.
Average production for the full year 2010 was 1,115 bopd with 
production during the second half of the year averaging 1,289 
bopd. Since the start of 2011, production has remained steady 
at a rate of approximately 1,300 bopd. Development plans for 2011 
includes an additional well intended to access an undeveloped 
pocket of the reservoir and upgrades to the in-field roads.
The main features of 2010 were the completion of the 
Grafovskaya #1 sub-salt exploration well, steady oil 
production from Uzenskoye and of extended test production 
on the Vostochny Makarovskoye field.
Operational Review
Volga Gas plc Annual Report and Accounts 2010_ 05
Business Overview Corporate Governance Financial Statements
Vostochny Makarovskoye Licence Area
The Group completed its first phase three well drilling programme 
on the VM field early in 2009. As previously reported, there are 
two completed and tested wells on the field with intra field 
pipelines laid between the well locations to the boundary of  
the Dobrinskoye gas facility in preparation for production.
During 2010, the Group conducted an extended pilot production 
programme on the VM#1 and VM#2 wells. The wells were 
individually flowed through a test separator installed at the field 
site. Condensate was gathered in storage tanks on location for 
sale while gas produced from the wells was flared. Although this 
activity was primarily a technical test programme, it provided a 
small profit contribution. All costs, including installation of test 
equipment, were expensed in 2010.
While the test programme has yet to be completed, the data 
gathered so far has enabled the Group to develop a production 
plan for the field. Initial production from the field will be managed 
to enable higher recovery of condensate from the reservoir in 
the early years while in the later years, an increasing proportion 
of gas is planned to be produced from the wells.
Commencement of full time production has been delayed pending 
completion of the previously planned acquisition by the Group 
of a 75% interest in the gas processing unit (“GPU”) located 
approximately 5km from the VM licence area. With the anticipated 
settlement of the legal and commercial disputes with Trans Nafta 
moving to a conclusion, we hope shortly to commence the final 
work required to bring the VM field into production. Included in 
the required work is an upgrade to the GPU so it can become 
fully operational, including transfer of a sulphur treatment unit 
from the VM licence area to the GPU.
Mikhail Ivanov
Chief Executive Officer
Flow line during  
Vostochny Makarovskoye 
test production
Gas flare during  
test production on  
the Vostochny 
Makarovskoye field
Oil, gas and condensate reserves
Recoverable reserves category
 
C1 C2 C1+C2
Vostochny-Makarovskoye
Natural Gas (bcf) 164.5 87.5 252. 1
Condensate (mmbbl) 8.3 3.9 12.2
Total (mmboe) 35.8 18.5 54.2
Yuzhny Uzenskoye (Karpenskiy Licence supra-salt) 
Crude Oil (mmbbl) 9.3 3.8 13. 1
Group total
C1 C2 C1+C2
Gas (bcf) 164.5 87.5 252. 1
Condensate (mmbbl) 8.3 3.9 12.2
Crude oil (mmbbl) 9.3 3.8 13. 1
Total (mmboe) 45.0 22.3 67.3 06_Annual Report and Accounts 2010
Results for the year
In 2010, the Group generated US$13.1 million in turnover (2009: 
US$11.6 million) from the sale of 407,050 barrels of crude oil and 
condensate (2009: 458,900 barrels). Oil and condensate sales 
were made into the domestic market during the period. The 
average price realised was the equivalent of US$32.06 per barrel 
(2009: US$25.76 per barrel). With sales made exclusively into the 
regional market in the Volga Region at the wellhead, our sales 
prices closely reflect international prices, adjusted for export 
taxes and transportation costs. The oil production activities 
generated a gross profit of US$6.2 million in 2010 (2009: profit 
of US$5.8 million).
As indicated in the Operational Review, the average cost of 
production from the Uzenskoye oil field was US$1.07 per barrel 
(2009: US$0.71 per barrel). Production based taxes increased to 
US$12.91 per barrel (2009: US$9.65), reflecting the increase in 
the Urals oil price which determines the rate of Mineral Extraction 
Tax. Gross profit per barrel of oil sold in 2010 was US$15.26 per 
barrel (2009: US$13.27 per barrel).
Operating and administrative expenses in 2010 were US$4.7 
million (2009: US$3.7 million) as a result of higher legal expenses.
During 2H 2010, the Group undertook extended production 
testing on the Vostochny Makarovskoye gas-condensate field. 
The full costs incurred, including installation of test equipment 
and operating costs, were expensed during the year. These costs, 
offset by condensate sales from test production, were included  
in exploration and evaluation expenses.
The Group experienced positive EBITDA (defined as operating 
profit before non-cash charges, exploration expense, depletion 
and depreciation) of US$2.6 million (2009: US$3.0 million).
After recording an exploration and evaluation expense of 
US$23.9 million (2009: US$1.5 million), comprising primarily an 
impairment charge relating to the unsuccessful Grafovskaya #1 
well in the KLA, the Group recorded an operating loss for the year 
of US$22.5 million (2009: operating profit of US$0.6 million).
The Group recognised a loss before tax of US$22.2 million 
(2009: profit before tax of US$0.9 million) and reported net  
loss after tax and minorities interests of US$16.9 million  
(2009: profit of US$0.2 million). These numbers include current 
and deferred income tax credits of US$5.3 million (2009: charges 
of US$0.7 million).
No dividends have been paid or proposed for the year  
(2009: none).
Cash flow
Group net cash flow from operating activities was US$7.3 million 
(2009: US$4.0 million), before expensed exploration costs. The 
net cash flow of the Group was enhanced by a net US$4.5 million 
(2009: US$2.5 million) from positive working capital movements 
and from the recovery of VAT on past capital expenditures. Having 
accrued net prepayments in earlier years, the cash outflow from 
investing in exploration and development assets in 2010 was 
US$14.0 million (2009: US$20.2 million), slightly less than the 
capital expenditure for the year.
Capital Expenditure
During 2010 a total of US$14.1 million was invested in capital 
expenditure on the Group’s licence areas (2009: US$23.7 
million) as detailed below:
2010
(US$ million)
2009
(US$ million)
Oil & gas exploration assets 12.5 9.8
Development & producing assets 1.3 13.7
Real Estate assets 0.3 0.2
Total 14.1 23.7
The most significant individual components of the capital 
expenditure were US$12.5 million on Oil & Gas Exploration 
assets, predominantly the Grafovskaya #1 exploration well. 
Expenditure on development and producing assets primarily 
relates to the VM field.
Balance Sheet and Financing
As at 31 December 2010, the Group held cash and bank deposits 
of US$26.6 million (2009: US$33.6 million) and remains debt free.
As at 31 December 2010, the Group’s intangible assets were 
reduced to US$29.0 million (2009: US$40.1 million) following the 
impairment charge related to the Grafovskaya#1 well. The 
prepayment of RUR 600 million, made to Trans Nafta in November 
2008 continued to be recorded as a security deposit on 
acquisition of fixed assets, pending final resolution on planned 
acquisition of the gas plant assets.
Financial Review
Volga Gas plc
During 2010 our operations were primarily  
in an exploration and development phase 
although we also benefited from sustained 
production from the shallow oil reserves  
in the KLA. Annual Report and Accounts 2010_ 07
Business Overview Corporate Governance Financial Statements
The Group intends to fund its development and exploration 
expenditures using a combination of cash flow from operations 
and cash-on-hand. The Group will consider raising additional 
financing, both of equity and debt as appropriate, to explore 
and develop its asset base.
The Group’s financial statements are presented on a going 
concern basis.
Issue of share capital
There were no issues of shares during the year to 31 December 
2010. During the year to 31 December 2009, the Company issued 
a total of 27,000,000 shares in a non-preemptive placement 
generating net proceeds of US$26.6 million.
Tony Alves
Chief Financial Officer
Financial and operational summary
Sales volumes
1H10 2H10 2010 2009
Oil & condensate (barrels) 171,733 235,318 407,050 462,455 
Oil & condensate (bopd) 941 1,289 1, 115 1,267 
Operating Results (US$ 000)
1H10 2H10 2010 2009
Revenue 5,156 7,896  13,052 11,580 
Production costs (267) (169) (436) (327)
Production based taxes (2,105) (3,149) (5,254) (4,465)
Depletion, depreciation and other (458) (692) (1,150) (983)
Cost of sales (2,830) (4,010) (6,840) (5,775)
Gross profit 2,326 3,886  6,212 5,805 
Exploration expense (184) (23,753) (23,937) (1,466)
Operating & administrative expenses (2,485) (2,248) (4,733) (3,728)
Operating profit/(loss) (343) (22,115) (22,458) 611
Operating data (US$/bbl)
1H10 2H10 2010 2009
Net realisation 30.02 33.55 32.06 25.76 
Production costs 1.55 0.72 1.07 0.71 
Production based taxes 12.26 13.38 12.91 9.65 
Depletion, depreciation and other 2.67 2.94 2.83 2.13 
EBITDA calculation (US$ 000)
1H10 2H10 2010 2009
Operating profit/(loss) (343) (22, 115) (22,458) 611 
Exploration expense 184 23,753 23,937 1,466 
DD&A 458 692 1,150 881 
EBITDA 299 2,330 2,629 2,958 
Cattle herding in the 
Karpenskiy licence area 08_Annual Report and Accounts 2010
The following risk factors, which are not exhaustive, are particularly 
relevant to the Group’s business activities:
Volatility of prices for oil and gas
The supply, demand and prices for oil and gas are volatile and are 
influenced by factors beyond the Group’s control. These factors 
include global demand and supply, exchange rates, interest and 
inflation rates and political events. A significant prolonged decline 
in oil and gas prices could impact the viability of some of the 
Group’s exploration activities. Additionally, the Group’s production 
is predominantly sold in the domestic Russian markets which 
are influenced by domestic supply and demand factors, the 
level of Russian export taxes and regional transportation costs.
Substantially all of the Group’s revenues and cash flows come 
from the sale of oil and gas. If oil and gas prices should fall below 
and remain below the Group’s cost of production for any sustained 
period, the Group may experience losses and may be forced to 
curtail or suspend some or all of the Group’s production, at the 
time such conditions exist. In addition, the Group would also 
have to assess the economic impact of low oil and gas prices 
on it’s ability to recover any losses the Group may incur  
during that period and on the Group’s ability to maintain 
adequate reserves.
The Group does not currently hedge its crude oil production  
to reduce its exposure to oil price volatility.
Oil and gas production taxes
The Group’s sales generated from oil and gas production are 
subject to Mineral Extraction Taxes, which form a material 
proportion of the total costs of sales. The rates of these taxes 
may be subject to increases by the Russian government.
Exploration and reserve risks
Whilst the Group will seek to apply the latest technology to assess 
exploration licences, the exploration for, and development of, 
hydrocarbons is speculative and involves a high degree of risk. 
These risks include the uncertainty that the Group will discover 
sufficient commercially exploitable oil or gas resources. 
Unsuccessful exploration efforts may result in impairment  
to the balance sheet value of exploration assets.
The Group has disclosed Russian category C1 and C2 reserves 
for its oil and gas fields, as recorded by the Russian State 
Committee for Reserves. If the actual results of producing these 
fields are significantly different to expectations, there  
may be changes in the future estimates of reserves. These may 
impact the balance sheet values of the Group’s Development 
Intangible Assets and the Group’s Property, Plant and Equipment.
Environmental risk
The oil and gas industry is subject to environmental hazards, such 
as oil spills, gas leaks, ruptures and discharges of petroleum 
products and hazardous substances. These environmental 
hazards could expose the Group to material liabilities for property 
damages, personal injuries, or other environmental harm, including 
costs of investigating and remediating contaminated properties.
The Group is subject to stringent environmental laws in Russia 
with regards to its oil and gas operations. Failure to comply with 
such laws and regulations could subject the Group to material 
administrative, civil, or criminal penalties or other liabilities. 
Additionally, compliance with these laws may, from time to time, 
result in increased costs to the Group’s operations, impact 
production, or increase the costs of potential acquisitions.
In particular, the Group’s exploration activities in the northern 
end of the Karpenskiy Licence Area are conducted close to a 
protected nature area and the natural habitat of the Otis Tarda 
(Great Bustard), a rare and endangered bird species protected 
by Russian environmental law. The Group liaises closely with the 
Federal Service of Environmental, Technological and Nuclear 
Resources of the Saratov Oblast and conducts environmental 
studies both as required by, and in addition to, its licence 
obligations to mitigate any specific risk.
The Group did not incur any material costs relating to the 
compliance with environmental laws during the period.
Risk of operating oil and gas properties
The oil and gas business involves certain operating hazards, such 
as well blowouts, cratering, explosions, uncontrollable flows  
of oil, gas or well fluids, fires, pollution and releases of toxic 
substances. Any of these operating hazards could cause serious 
injuries, fatalities, or property damage, which could expose the 
Group to liabilities. The settlement of these liabilities could 
materially impact the funds available for the exploration and 
development of the Group’s oil and gas properties. The Group 
maintains insurance against many potential losses and liabilities 
arising from its operations in accordance with customary 
industry practices, but the Group’s insurance coverage cannot 
protect it against all operational risks.
The Group is subject to various risks relating  
to political, economic, legal, social, industry,  
business and financial conditions.
Volga Gas plc
Risk Factors Annual Report and Accounts 2010_ 09
Business Overview Corporate Governance Financial Statements
Foreign currency risk
The Group’s capital expenditures are predominantly in Russian 
rubles (“RUR”) and its operating costs in both US dollars and 
RUR. Turnover is in RUR and funding has been raised in US 
dollars. Any changes in the relative exchange rates among  
US dollar and RUR could positively or negatively affect the 
Group’s results.
Business in Russia
Amongst the risks that face the Group in conducting business 
and operations in Russia are:
Economic instability, including in other countries or the   –
global economy that could lead to consequences such as 
hyperinflation, currency fluctuations and a decline in per 
capita income in the Russian economy.
Governmental and political instability that could disrupt,  –
delay or curtail economic and regulatory reform, increase 
centralised authority or result in nationalisations.
Social instability from any ethnic, religious, historical or other  –
divisions that could lead to a rise in nationalism, social 
disturbances or conflict, including terrorist attacks such as 
the bombing at Moscow Domodedovo airport in January 2011.
Uncertainties in the developing legal and regulatory  –
environment, including, but not limited to, conflicting laws, 
decrees and regulations applicable to the oil and gas industry 
and foreign investment.
Unlawful or arbitrary action against the Group and its interests  –
by the regulatory authorities, including the suspension or 
revocation of their oil or gas contracts, licences or permits  
or preferential treatment of their competitors. 
Lack of independence and experience of the judiciary, difficulty  –
in enforcing court or arbitration decisions and governmental 
discretion in enforcing claims.
Expected changes to the federal and local tax systems. –
Laws restricting foreign investment in the oil and gas industry. –
Legal systems
Russia, and other countries in which the Group may transact 
business in the future, have or may have legal systems that are 
less well developed than those in the United Kingdom. This 
could result in risks such as:
Potential difficulties in obtaining effective legal redress in the  –
court of such jurisdictions, whether in respect of a breach of 
contract, law or regulation, including an ownership dispute.
A higher degree of discretion on the part of   –
governmental authorities.
The lack of judicial or administrative guidance on   –
interpreting applicable rules and regulations.
Inconsistencies or conflicts between and within various   –
laws, regulations, decrees, orders and resolutions.
Relative inexperience of the judiciary and courts in   –
such matters.
In certain jurisdictions, the commitment of local business people, 
government officials and agencies and the judicial system to abide 
by legal requirements and negotiated agreements may be more 
uncertain, creating particular concerns with respect to licences 
and agreements for business. These may be susceptible to 
revision or cancellation and legal redress may be uncertain or 
delayed. There can be no assurance that joint ventures, licences, 
licence applications or other legal arrangements will not be 
adversely affected by the jurisdictions in which the Group operates.
Liquidity risk
At 31 December 2010 the Group had US$26.6 million of cash 
and cash equivalents available to fund its ongoing operations 
and associated exploration and development activities. At 31 
December 2010 the Group has committed and planned capital 
expenditure of US$5.5 million relating to licence obligations on 
the Urozhainoye-2 licence area and further development drilling  
on the Uzenskoye field.
Through its ordinary course activities, the Group is exposed to 
legal, operational and development risk that could delay cash 
generation from operations or may require additional capital 
investment that could place increased burden on the Group’s 
available cash resources.
The Group’s discretionary exploration drilling activities on  
the sub-salt structures on the Karpenskiy and Pre-Caspian 
Licence Areas may require additional funding. Furthermore, 
should these activities lead to one or more discoveries, the 
Group will require significant further funds to appraise and 
develop these licence areas.
Tony Alves
Chief Financial Officer
Part of the gas  
processing unit 10_ Annual Report and Accounts 2010
Board of Directors
Alexey Kalinin
Non-Executive Chairman
Appointed to the Board: 14 March 2007
Committee membership: Remuneration
Mr Kalinin is a Senior Partner of Baring Vostok Capital Partners. 
He joined Baring Vostok in 1999 from Alfa Capital, where he 
served for six years as the Director of the Department for Direct 
Investments. Alexei represents the interests of Baring Vostok’s 
funds on the Board of Directors of a wide range of portfolio 
companies. He has a doctorate from the Moscow Power 
Engineering Institute, where he conducted scientific research, 
lectured for 12 years and served as the Director of the Youth 
Center for Scientific and Technical Creativity. Mr Kalinin is  
51 years old.
Mikhail Ivanov
Chief Executive Officer, Executive Director
Appointed to the Board: 14 March 2007
Committee membership: n/a
Mr Ivanov was Director of Oil and Gas Investments at Baring 
Vostok. Mr Ivanov has over 18 years experience in the oil and gas 
industry which includes 10 years working for the Schlumberger 
Group, beginning his career with Schlumberger Limited as a 
Field Engineer in Siberian Russia. During his time with 
Schlumberger he assumed various management and technical 
positions in Russia, the USA and the United Kingdom. He was 
responsible for Schlumberger’s operations in Iran, Georgia and 
Azerbaijan. He is the co-founder of a number of successful venture 
companies. During 2009 he was appointed non-executive 
director of Zhaikmunai Group Limited. Mr Ivanov holds an M.S. 
degree in Geophysics from Novosibirsk State University and an 
M.B.A. from the Kellogg School of Management of Northwestern 
University. He is an elected member of SPE. Mr Ivanov is  
41 years old.
Antonio Alves
Chief Financial Officer, Executive Director
Appointed to the Board: 12 January 2009
Committee membership: n/a
Mr Alves has had experience with the independent oil and gas 
industry for over 20 years as one of the leading equity analysts 
covering the sector. Prior to joining Volga Gas, he was head of 
oil and gas research for KBC Peel Hunt and was closely involved 
with the Company’s 2007 IPO. He previously held positions with 
Investec Securities, The Bell Group International and Schroders. 
He is a Member of the Securities Institute and of the Petroleum 
Exploration Society of Great Britain. He read mathematics  
at Cambridge University between 1977 and 1983 both as an 
undergraduate and a post-graduate research student. Mr Alves 
is 51 years old. He was appointed as Chief Financial Officer and 
Company Secretary and joined the Board on 12 January 2009.
Ronald Freeman
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, Nomination, Remuneration
Mr Freeman is a non-executive board director of Troika Dialog, 
(Moscow); Severstal (Cherepovets); Polish Telecom (Warsaw). 
He is also a member of the Executive Committee of the Atlantic 
Council (Washington DC), the International Advisory Committee 
of Columbia Law School (New York); co-chairman of the finance 
committee of the UK-US Fulbright Commission (London). From 
1973 to 1991 and from 1997 until his retirement from Citigroup 
as co-head of European Investment Banking in 2000, he was an 
investment banker specialising in financing and mergers and 
acquisition for companies in the oil and gas industry with Salomon 
Brothers, now a unit of Citigroup. From 1991 to 1997, he was 
head of the Banking Department of the European Bank for 
Reconstruction and Development (London). Prior to that, he 
practiced law with Baker & McKenzie (Paris) and served as a 
management consultant in the Paris office of McKinsey & 
Company. Mr Freeman was born in New York and has dual US 
and UK citizenship. He has a B.A from Lehigh University and  
an LL.B. from Columbia Law School (1964). He was admitted  
to the Bar of the State of New York. He is 71 years old.
Volga Gas plc Annual Report and Accounts 2010_ 11
Business Overview Corporate Governance Financial Statements
Stephen Ogden
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, Nomination, Remuneration
Mr Ogden is the Founder & Managing Partner of the First 
Montenegro Stone Property Fund, and the Co-Founder & 
Managing Partner of the Istanbul-based Prospera Property Fund. 
Mr Ogden is the Chairman of the Board of MDM-Print (Russia). 
Mr Ogden is the former Chairman of the Board of Lenta, Russia’s 
largest privately owned food retailer, and was previously a 
non-executive director of United Confectioneries (Russia), 
Heineken Russia and Metropolis Media (former Yugoslavia).  
He was Chief Financial Officer of the Bochkarev Brewery in  
St. Petersburg from 1997 to 2002. Prior to becoming Chief 
Financial Officer of Bochkarev, Mr Ogden was an auditor with 
KPMG and PricewaterhouseCoopers, and Financial Controller of 
CS First Boston (Moscow). Mr Ogden has a joint honours degree 
in economics & politics from Durham University, England, and is 
a qualified British chartered accountant (“FCA”). Mr Ogden is 
active in British politics. He is a former Conservative Councillor 
of Altrincham, Cheshire and his name is on the approved list of 
Conservative Parliamentary candidates. Mr Ogden is 43 years old.
Michael Calvey
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, Nomination
Mr Calvey is a Founder and Senior Partner of Baring Vostok  
Capital Partners in Moscow, and a Director of Baring Private 
Equity International, a global private equity firm headquartered 
in London. Since 1994 Mr Calvey has co-led the investment team 
managing and has acted as the Chairman of the Investment 
Committee for all of Baring Vostok’s funds. Mr Calvey is currently 
on the Boards of several of Baring Vostok’s portfolio companies. 
Prior to joining Baring Vostok, Mr Calvey worked at the European 
Bank for Reconstruction and Development where he was 
responsible for several of the bank’s investments in the oil and 
gas sector in Russia. Prior to his work with the bank, Mr Calvey 
was a member of the oil and gas team at Salomon Brothers Inc 
in New York on a variety of corporate finance and mergers and 
acquisitions assignments. Mr Calvey has a M.Sc. in accounting 
and finance from the London School of Economics. Mr Calvey  
is 43 years old.
Vladimir Koshcheev
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: n/a
Mr Koshcheev currently acts as President of Joint Stock 
Company “NPO POG”. Until 2009 he was President of Pervaya 
Investizionno-Stroitelnaya Company LLC, Spinaker LLC.  
He has been Chairman of CJSC AKSM since 2002. Mr Koshcheev 
was President of Privolzhskaya Neftyanaya Company LLC between 
2003 and 2005 and was previously a shareholder in and acted 
as President of Vesla. Mr Koshcheev received a specialist 
diploma from Moscow State Technical University in 1978 and  
he is a member of the Russian Academy of Natural Sciences. 
Mr Koshcheev is 53 years old. 12_Annual Report and Accounts 2010
Introduction
The Board’s overriding objective is to ensure that the Group 
delivers long-term capital appreciation for its shareholders.
Compliance
Volga Gas plc seeks to comply with the Combined Code on 
Corporate Governance albeit as an AIM-listed company it is not 
required to. The Board of Directors is committed to developing 
and applying high standards of corporate governance appropriate 
to the Company’s size and its future prospects.
This statement sets out measures taken by the Board to apply 
the principles of the Code to the year ended 31 December 2009 
and to the date of the Directors’ Report.
Board of directors
Role of the Board
The Board’s role is to provide entrepreneurial leadership to the 
Group within a framework of prudent and effective controls which 
enables risk to be assessed and managed. The Board sets the 
Group’s strategic aims and ensures that the necessary financial 
and human resources are in place for the Group to meet its 
objectives, and reviews management’s performance in meeting 
these objectives. The Board sets and monitors the Group’s 
values and standards and ensures that the Group’s obligations 
to shareholders and other stakeholders are understood and met.
The Board has a formal schedule of matters reserved for its 
approval, including:
Strategic and policy considerations –
Annual budget, including capital expenditure –
Interim and final financial statements –
Management structure and appointments –
Mergers, acquisitions, disposals –
Capital raising –
Significant changes in accounting policies –
Appointment or removal of Directors or the Company Secretary –
Board composition
The Board currently comprises two executive directors and  
five non-executive directors, of whom three are deemed to  
be independent and two non-independent:
Alexey Kalinin – Non-Executive Chairman –
Mikhail Ivanov – Executive Director and CEO –
Tony Alves – Executive Director, CFO and Company Secretary –
Ronald Freeman – Independent Non-executive –
Stephen Ogden – Independent Non-executive –
Vladimir Koshcheev – Independent Non-executive  –
Michael Calvey – Non-executive –
There is a clear division of responsibilities between the executive 
and non-executive directors.
Board balance and independence
The Board recognises that Messrs Kalinin and Calvey are not 
independent by virtue of their direct management responsibilities 
for the limited partnerships comprising Baring Vostok Private 
Equity Funds III and IV, the Company’s controlling shareholder 
(‘Controlling Shareholder’). However, in light of the value, 
experience and contacts which they afford to the Company at 
this stage of its development and by virtue of the Relationship 
Agreement, which, inter alia, ensures that the Controlling 
Shareholder does not exercise undue influence over the Company 
or prevent it from acting independently of the Controlling 
Shareholder, the Board believes that the continued presence  
of Messrs Kalinin and Calvey on the board is beneficial for the 
Company. Mr Kalinin also serves as Chairman of the Board and 
was not considered to be independent on his appointment.
Notwithstanding under the provisions of the Combined Code  
as a Smaller Company the Company meets the requirements  
to have at least two independent non-executives on the Board.
All directors are permitted access to independent professional 
advice in the course of execution of their duties, at the 
Company’s expense.
The Board has established the following committees:
Audit Committee
The Audit Committee was appointed in March 2007 and 
comprises three directors: 
Mr Ogden – Chairman
Mr Freeman
Mr Calvey
The Audit Committee is responsible for selecting the Group’s 
independent auditors, pre-approving all audit and non-audit related 
services, reviewing with management and the independent 
auditors the Group’s financial statements, significant accounting 
and financial policies and practices, audit scope and adequacy 
of internal audit and control systems. 
The audit committee meets at least twice each year.
Remuneration Committee
The Remuneration Committee was also appointed in March 
2007 and comprises three directors:
Mr Freeman – Chairman
Mr Ogden
Mr Kalinin
The Remuneration Committee is responsible for determining 
compensation of the Company’s key employees, including the 
Chief Executive Officer, Chief Financial Officer, and other key 
personnel as may be determined from time to time by the 
Remuneration Committee.
The directors’ remuneration report is set out on pages 17 to 18.
Corporate Governance Statement 
Volga Gas plc Annual Report and Accounts 2010_ 13
Corporate Governance Financial Statements Business Overview
Nomination Committee
The Nomination Committee was appointed in March 2007 and 
comprises three directors:
Mr Freeman – Chairman
Mr Ogden
Mr Calvey
The Nomination Committee is responsible for reviewing the 
structure, size and composition of the Board, making 
recommendations to the Board concerning plans for succession 
for both Executive and Non-Executive Directors including the 
Chief Executive and other senior management, preparing a 
description of the role and capabilities required for a particular 
appointment and identifying and nominating candidates to fill 
Board positions as and when they arise.
Board meetings
The Board met eight times during the year ended 31 December 
2010 with the following attendance:
2010 2009
Alexey Kalinin 7 8
Mikhail Ivanov 7 8
Tony Alves 8 9
Ronald Freeman 8 6
Stephen Ogden 7 7
Vladimir Koshcheev 5 5
Michael Calvey 7 7
Indemnification of directors
In accordance with the Company’s Articles of Association and to 
the extent permitted by the law of England and Wales, directors 
are granted an indemnity from the Company in respect of liabilities 
incurred as a result of their office. In respect of those matters  
for which the directors may not be indemnified, the Company 
maintained a directors’ and officers’ liability insurance policy 
throughout the financial year. This policy has been renewed for 
the next financial year.
Re-election of directors
The Company requires that all directors stand for re-election at 
intervals of no more than three years. Accordingly Messrs Kalinin, 
Koshcheev and Freeman will retire at the forthcoming AGM and 
will seek re-election by shareholders.
Internal controls
The Directors acknowledge their responsibility for the system of 
internal controls for the Group and for reviewing its effectiveness. 
Any system of internal control can only provide reasonable, and 
not absolute, assurance that material financial irregularities will 
be detected or that the risk of failure to achieve business 
objectives is eliminated.
The Group’s risk and controls framework covers all material risks 
and controls including those of an operational, financial, and 
compliance nature. Internal control procedures consist, inter 
alia, of formal delegations of expenditure authority by the Board 
to executive management, and controls relating to key stages  
of transactions including supplier approval, contract signature, 
and payment release.
The Directors consider that the frequency of Board meetings 
and level of detail presented to the Board for its consideration  
in relation to the operations of the Group provide an appropriate 
process to identify, evaluate and manage significant risks relevant 
to its operations on a continuous basis, and this process is 
considered to be in accordance with the revised guidance on 
internal control published in October 2005 (‘Turnbull Guidance’). 
Investor relations
The Company places considerable importance on communication 
with shareholders and engages them on a wide range of issues.
The Group has an ongoing programme of dialogue and meetings 
between the executive directors and institutional investors, fund 
managers and analysts. At these meetings a wide range of 
relevant issues including strategy, performance, management 
and governance are discussed within the constraints of the 
information already made public.
The Company is equally interested in the views and concerns of 
private shareholders and to this end ensures that the executive 
directors present the Company at forums where private investors 
are present.
Shareholders have the opportunity to meet and question the 
Board at the AGM which will be held on 13 June 2011, at which 
the Chairman, the Chairman of the Audit Committee and all 
Executive Directors will be available.
By order of the Board
Tony Alves
Company Secretary
28 March 2011
  14_Annual Report and Accounts 2010
The directors present their report together with the Group’s 
audited consolidated financial statements for the period from 1 
January 2010 to 31 December 2010.
Results and dividend
The Group’s results are set out on pages 20 to 25 and show net 
loss of US$16.9 million for the year to 31 December 2010. The 
directors do not propose to pay a dividend.
Subsequent events
Trans Nafta case: In February 2011 the Moscow Court of 
cassation upheld the initial verdict in the case with Trans Nafta 
ordering Trans Nafta to pay RUR 640 million (approximately  
$22 million) representing the advance previously made to Trans 
Nafta in respect of the acquisition of a 75% interest in a gas 
processing unit.
Principal activities, business review and future developments
Volga Gas is a public limited company registered in England and 
Wales with registered number 5886534, was incorporated in the 
United Kingdom on 25 July 2006 and listed on AIM on 25 April 
2007. Volga Gas operates primarily through subsidiary companies 
as set out in Note 2.2 to the accounts. The principal activity of 
the Group is the exploration, development and production of its 
gas, condensate and oil fields in the Volga Region of European 
Russia. The Group owns 100% of four licence areas in the Saratov 
and Volgograd regions: Karpenskiy, Vostochny-Makarovskoye, 
Pre-Caspian and Urozhainoye-2.
The Group’s business strategy is to bring the proven-undeveloped 
Vostochny-Makarovskoye field into production and to grow 
production on the supra-salt Uzenskoye field in the Karpenskiy 
Licence Area (“KLA”) whilst at the same time exploring the 
potentially prospective structures on the Group’s licence areas. 
The Group is also evaluating certain acquisition opportunities. 
Highlights of the Group’s activities for the period ended  
31 December 2010 are:
Continued and steady production from the Yuzhny Uzenskoye  –
oil field on the KLA
Completion of drilling and testing of the Grafovskaya #1 sub-salt  –
exploration well on the Yuzhny-Ershovskoye structure on  
the KLA
Successful extended production testing of the wells on the  –
Vostochny Makarovskoye gas-condensate field.
Ongoing negotiations over a gas processing facility to enable  –
production from the Vostochny-Makarovskoye licence area.
The Group’s activities are described in greater detail in the Chief 
Executive’s Review on page 3 and in the Operational Review on 
pages 4 to 5. The principal risks associated with the Group’s 
activities are set out in the Financial Review on pages 6 to 7.
Key performance indicators
Given the nature of the business and that the Group is in a start-up 
phase of operations, the directors are of the opinion that further 
analysis using KPI’s is not appropriate for an understanding of 
the development, performance or position of our business at 
this time. The directors are of the opinion that the Operational 
Review on pages 4 to 5 provides the relevant information.
Directors
The directors who served during the year were:
Alexey Kalinin, non-executive Chairman
Mikhail Ivanov, Chief Executive Officer
Michael Calvey, non-executive
Tony Alves, Chief Financial Officer
Ronald Freeman, non-executive
Vladimir Koshcheev, non-executive
Stephen Ogden, non-executive
Messrs Kalinin, Koshcheev and Freeman will retire by rotation 
and offer themselves for re-election in accordance with the 
Company’s Articles of Association.
Directors’ interests
The directors serving during the year had the following beneficial 
interests in the shares of the Company:
31 December
2010
Ordinary
Shares of
0.01p each
31 December
2009
Alexey Kalinin
1
– –
Mikhail Ivanov 1,000,000 1,000,000
Tony Alves 25,000 25,000
Ronald Freeman 55,000 55,000
Stephen Ogden 115,000 115,000
Vladimir Koshcheev 650,000 650,000
Michael Calvey
1
– –
1 Mr Calvey and Mr Kalinin are Co-Managing Partners of Baring Vostok Capital 
Partners Limited, a related party to Cavendish Nominees Limited and Dehus 
Dolmen Nominees Limited. As such Mr Calvey and Mr Kalinin have an indirect 
beneficial interest in the Company.
Substantial shareholders
On 22 March 2011 the following parties had notifiable interests 
of 3% or greater in the nominal value of the Company’s issued 
0.01p ordinary shares:
Number of
shares Percentage
Cavendish Nominees Ltd
1
39,620,000 48.90
Dehus Dolmen Nominees Ltd
2
7,906,889 9.76
HQ Fonder Sverige AB 4,499,633 5.55
1 Cavendish Nominees Ltd is a nominee vehicle which holds the interests of the 
limited partnerships which comprise Baring Vostok Private Equity Fund III.
2 Dehus Dolmen Nominees Ltd is a nominee vehicle which holds the interests of 
the limited partnerships which comprise Baring Vostok Private Equity Fund IV.
Report of the Directors 
Volga Gas plc Annual Report and Accounts 2010_ 15
Business Overview Corporate Governance Financial Statements
Options granted
An Executive Share Option Plan was adopted by the Company 
in July 2008 following which options over a total of 1,706,196 
shares were granted to Mikhail Ivanov and to Tony Alves. During 
2010 options over 450,247 shares (2009: 71,092 shares) were 
eligible for vesting. The details of these option grants are 
disclosed in the Remuneration Report below.
Interests in contracts
There were no contracts or arrangements during the period in 
which a director of the Company was materially interested and 
which were significant in relation to the business of the Company.
Creditors payment policy and practice
The Group aims to pay all its creditors promptly. For trade 
creditors it is the Group’s policy to:
agree the terms of the payment at the start of the business (i) 
with that supplier;
ensure that suppliers are aware of the terms of the payment; (ii) 
and
pay in accordance with contractual and other obligations. (iii) 
Political and charitable contributions
No political or charitable contributions were made in the year. 
Employment policies
The Group is committed to pursuing an equal opportunities 
employment policy, covering recruitment and selection, training, 
development, appraisal and promotion. The Group recognises 
the diversity of its employees, its customers, and the community 
at large and seeks to use employees’ talents to the fullest. This 
approach extends to the fair treatment of people with disabilities, 
in relation to their recruitment, training and development.  
Full consideration is given to staff who become disabled  
during employment.
Employee communication
The Group is committed to effective communications, which it 
maintains through regular information releases and staff briefings. 
Formal communications with employees take place through these 
channels. With respect to the Group’s operations in Russia and 
the recruitment of Russian employees, announcements, contracts, 
interviews and advertisements are conducted in the English and 
Russian languages, as applicable.
Health, safety and the environment
The Group’s policy and practice is to comply with health, safety 
and environmental regulations and requirements of the countries 
in which it operates, to protect its employees, contractors, assets 
and the environment.
The Company closely monitors its environmental obligations 
under the terms of its licence agreements. In particular, portions 
of the Karpenskiy Licence Area are located in the Saratovskiy 
Federal Nature Reserve and Tulipannaya Steppe Natural 
Sanctuary, which are protected by Russian environmental law. 
In accordance with Russian environmental law, all economic 
activity within the protected area is approved by the Russian 
government. The Otis Tarda, also known as the great bustard,  
a rare and endangered bird, occupies portions of the Karpenskiy 
Licence Area; the Company has ensured that all its activities 
minimise the impact on the birds’ habitat.
Share capital
The Company has authorised ordinary share capital of 
330,720,100 shares of 1p each. Under a special resolution  
by the shareholders of the Company on 14 June 2010 the 
directors have authority to allot shares up to an aggregate 
nominal value of £1,000,000 of which £150,000 could be issued 
non-preemptively, in accordance with sections 570 and 573 of 
the Companies Act 2006. This authority will expire the earlier of 
(i) fifteen months from the passing of the Resolution, or (ii) the 
conclusion of the Annual General Meeting of the Company to  
be held in 2011.
Statement of disclosure of information to auditors
As at the date of this report the serving directors confirm that;
so far as the directors are aware, there is no relevant audit  –
information of which the Company’s auditors are unaware; 
and
they have taken all steps that they ought to have taken as  –
directors in order to make themselves aware of any relevant 
audit information and to establish that the Company’s auditors 
are aware of that information.
Auditors
The Company’s auditors, PricewaterhouseCoopers LLP, have 
indicated their willingness to continue in office and a resolution 
concerning their reappointment will be proposed at the next 
Annual General Meeting.
Statement of directors’ responsibilities
Company law requires the directors to prepare financial statements 
for each financial year. Under that law the directors have elected 
to prepare the group and parent company financial statements 
in accordance with International Financial Reporting Standards 
(IFRSs) as adopted by the European Union. Under company law 
the directors must not approve the financial statements unless 
they are satisfied that they give a true and fair view of the state 
of affairs of the group and the company and of the profit or loss 
of the group for that period.
  Volga Gas plc
16_Annual Report and Accounts 2010
In preparing those financial statements, the directors are 
required to:
select suitable accounting policies and then apply   –
them consistently;
make judgements and estimates that are reasonable   –
and prudent;
prepare the financial statements on the going concern basis  –
unless it is inappropriate to presume the Group will continue 
in business; and
state whether applicable IFRSs as adopted by the European  –
Union have been followed, subject to any material departures 
disclosed and explained in the financial statements.
The directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the company and the group and enable 
them to ensure that the financial statements and the directors’ 
remuneration report comply with the Companies Act 2006 and, 
as regards the group financial statements, Article 4 of the  
IAS Regulation. They are also responsible for safeguarding  
the assets of the company and the group and hence for taking 
reasonable steps for the prevention and detection of fraud  
and other irregularities.
Electronic communications
The maintenance and integrity of the Volga Gas plc website 
(www.volgagas.com) is the responsibility of the directors; the work 
carried out by the auditors does not involve consideration of these 
matters and accordingly, the auditors accept no responsibility 
for any changes that may have occurred to the financial statements 
since they were initially presented on the website.
The Company’s website is maintained in compliance with AIM 
Rule 26.
Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions.
On behalf of the Board
Alexey Kalinin
Chairman of the Board
28 March 2011
Report of the Directors continued  Annual Report and Accounts 2010_ 17
Business Overview Corporate Governance Financial Statements
In common with the Board’s commitment to compliance with the 
Combined Code, the Company has adopted the Principles of 
Good Governance relating to directors’ remuneration. The 
Company discloses certain information relating to directors’ 
remuneration in this report, which is not audited.
Remuneration Committee
The Company established a Remuneration Committee in April 
2007, as set out in Corporate Governance on pages 12 to 13.
The Remuneration Committee advises the Board on Group 
compensation policy as it relates to executive directors and 
other key members of management, and may obtain advice 
from independent remuneration consultants appointed by the 
Company. The Remuneration Committee comprises Ronald 
Freeman (Chairman), Stephen Ogden and Alexey Kalinin, who 
are all deemed to be non-executive directors. Executive directors 
may be invited to attend meetings of the Remuneration Committee 
but do not vote on their own remuneration or incentives. The 
Remuneration Committee meets as required.
Remuneration Policy
The Company’s policy is to maintain levels of compensation for 
the Group that are comparable and competitive with peer group 
companies, so as to attract and retain individuals of the highest 
calibre, by rewarding them as appropriate for their contribution 
to the Group’s performance.
Executive Directors’ Employment Agreement and  
Terms of Appointment
The terms of each executive director’s appointment are set out 
in their service agreements. Each executive director agreement 
is based on similar terms, with no fixed duration. Each service 
agreement sets out details of basic salary and share options  
as applicable.
All executive director employment agreements can be terminated 
either by the director concerned or by the Company on giving  
six months notice during the first 24 months of service and 
thereafter by giving three months notice.
The executive directors do not participate in any Group pension 
scheme and their remuneration is not pensionable. However, 
one of the executive directors has elected to receive part of  
his remuneration by way of contributions to a personal pension 
plan. The executive directors are eligible for payment of cash 
bonuses and participation in any share-based incentive plan  
the Board implements.
Basic salaries
The basic salary of each executive director is established by 
reference to their responsibilities and individual performance.
Non-Executive Directors’ Terms, Conditions and Fees
The non-executive directors have been engaged under the terms 
of their letters of appointment. These engagements are for two 
years and can be terminated upon one month’s notice by either 
party. Re-appointment is subject to the Company’s Articles of 
Association which provide that one third of the directors shall  
be required to retire each year.
Fees
The fees paid to non-executive directors are determined by the 
Board and reviewed periodically to reflect current rates and 
practice commensurate with the size of the Company and  
their roles.
The remuneration of the non-executive directors is a matter  
for the Chairman of the Board and the Chief Executive Officer.  
In the event of the appointment of an independent non-executive 
Chairman his remuneration would be a matter for the Chairman 
of the Remuneration Committee and the Chief Executive Officer.
Directors’ Remuneration Report 
Audited Information – Directors Detailed Emoluments
Salary
US$ 000
Pension
Contribution
US$ 000
Share Based
Compensation
US$ 000
Fees
US$ 000
Aggregate
Remuneration
for the Year
31 December
2010
US$ 000
Aggregate
Remuneration
for the Year
31 December
2009
US$ 000
Executive Directors
M. Ivanov 404 – 15 – 419 437
A. Alves 273 31 108 – 412 320
Non-Executive
A. Kalinin – – – – – –
R. Freeman – – – 50 50 50
S. Ogden – – – 50 50 50
V. Koshcheev – – – – – –
M. Calvey – – – – – – Volga Gas plc
18_Annual Report and Accounts 2010
Directors’ Interests in the Share Capital of the Company
The Directors’ interests in the share capital of the Company  
are disclosed in the Report of the Directors on pages 14 to 16.  
There has been no change in the interest of any director 
between 1 January 2010 and the date of this report.
Directors’ Share Options
The Company adopted an Executive Share Option Plan (“ESOP”) 
on 14 July 2008, which was subsequently amended on  
17 December 2008. Under the terms of this Plan, a maximum  
of 2,843,661 shares (equivalent to approximately 5% of the  
then issued share capital) may be allocated and subject to 
performance criteria and vesting periods as specified by the 
Remuneration Committee.
During 2008, the Company granted options to acquire 1,137,464 
Ordinary Shares to Mikhail Ivanov under the terms ESOP. The 
options may be exercised at a price of 405p per share and vest 
in equal portions on May 2010, 2011 and 2012 and will remain 
outstanding until May 2017. On 17 December 2008, Tony Alves 
was granted options to acquire 568,732 Ordinary Shares in the 
Company at an exercise price of 100p per share. The options will 
vest over a period of up to four years subject to the satisfaction 
of performance conditions which are related to the market price 
of the Company’s shares. The vested options become exercisable 
on a straight line, cumulative basis at a rate of 12.5% of the total 
option grant every six months (starting from the date of grant) 
and will remain exercisable until eight years from the date of 
grant. During 2010, options over 450,247 shares became eligible 
for vesting (2009: 71,092 shares).
By order of the Board
Tony Alves
Company Secretary
28 March 2011
Directors’ Remuneration Report continued  Annual Report and Accounts 2010_ 19
Business Overview Corporate Governance Financial Statements
Independent Auditors’ Report  
to the Members of Volga Gas plc
We have audited the group and parent company financial 
statements (the ‘‘financial statements’’) of Volga Gas plc for  
the year ended 31 December 2010 which comprise the Group 
Income Statement, the Group Statement of Comprehensive 
Income, the Group Balance Sheet, the Group Cash Flow 
Statement, the Company Balance Sheet, the Company Cash 
Flow Statement, the Group Statement of Changes in 
Shareholders’ Equity, the Company Statement of Changes in 
Shareholders’ Equity and the related notes. The financial 
reporting framework that has been applied in their preparation is 
applicable law and International Financial Reporting Standards 
(IFRSs) as adopted by the European Union and, as regards the 
parent company financial statements, as applied in accordance 
with the provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities 
Statement the directors are responsible for the preparation of 
the financial statements and for being satisfied that they give a 
true and fair view. Our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable 
law and International Standards on Auditing (UK and Ireland). 
Those standards require us to comply with the Auditing Practices 
Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and 
only for the company’s members as a body in accordance with 
Chapter 3 of Part 16 of the Companies Act 2006 and for no 
other purpose. We do not, in giving these opinions, accept or 
assume responsibility for any other purpose or to any other 
person to whom this report is shown or into whose hands it may 
come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material 
misstatement, whether caused by fraud or error. This includes an 
assessment of: whether the accounting policies are appropriate 
to the group’s and parent company’s circumstances and have 
been consistently applied and adequately disclosed; the 
reasonableness of significant accounting estimates made by the 
directors; and the overall presentation of the financial statements.
Opinion on financial statements 
In our opinion:
the financial statements give a true and fair view of the state  –
of the group’s and the parent company’s affairs as at  
31 December 2010 and of the group’s loss and group’s  
and parent company’s cash flows for the year then ended;
the group financial statements have been properly prepared  –
in accordance with IFRSs as adopted by the European Union; 
the parent company financial statements have been properly  –
prepared in accordance with IFRSs as adopted by the 
European Union and as applied in accordance with the 
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance  –
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies  
Act 2006
In our opinion: 
the part of the Directors’ Remuneration Report to be audited  –
has been properly prepared in accordance with the Companies 
Act 2006; and 
the information given in the Directors’ Report for the financial  –
year for which the financial statements are prepared is 
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if,  
in our opinion:
adequate accounting records have not been kept by the  –
parent company, or returns adequate for our audit have not 
been received from branches not visited by us; or 
the parent company financial statements and the part of the  –
Directors’ Remuneration Report to be audited are not in 
agreement with the accounting records and returns; or 
certain disclosures of directors’ remuneration specified by  –
law are not made; or
we have not received all the information and explanations   –
we require for our audit.
Kevin Reynard (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Aberdeen
29 March 2011 Volga Gas plc
20_Annual Report and Accounts 2010
Year ended 31 December Notes 2010 2009
Continuing operations
Revenue 13,052 11,580 
Cost of sales 5 (6,840) (5,775)
Gross profit 6,212 5,805 
Exploration and evaluation expense 5(a) (23,937) (1,466)
Operating and administrative expenses 5 (4,733) (3,728)
Operating (loss)/profit (22,458) 611
Finance income 6 144 87
Other gains and losses – net 7 97 183
(Loss)/profit for the period before tax (22,217) 881
Current income tax 8 1,518 (21)
Deferred income tax 8 3,808 (716)
(Loss)/profit for the period before non-controlling interests (16,891) 144
Attributable to:
Non-controlling interests (22) (88)
The owners of the parent company (16,869) 232
Basic and diluted (loss)/profit per share (in US dollars) 9 (0.21) 0.004 
Weighted average number of shares outstanding 81,017,800 66,915,354
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the parent company 
profit and loss account. The loss for the parent company for the year was US$1,158,000 (2009: US$1,086,000).
Group Statement of Comprehensive Income 
(presented in US$ 000)
Year ended 31 December Notes 2010 2009
(Loss)/profit for the period (16,891) 144
Other comprehensive expense:
Currency translation differences (1,007) (2,037)
Total comprehensive expense for the period (17,898) (1,893)
Attributable to:
Non-controlling interests (22) (88)
The owners of the parent company (17,876) (1,805)
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Group Income Statement 
(presented in US$ 000) Annual Report and Accounts 2010_ 21
Business Overview Corporate Governance Financial Statements
At 31 December Notes 2010 2009
Assets
Non-current assets
Intangible assets 10 28,965  40,093 
Property, plant and equipment 11 37,493  37,628 
Other non-current assets 12(a) 3,578  6,229 
Security deposit on acquisition of fixed assets 12(b) 19,687  19,839 
Deferred tax assets 8 5,105  1,211 
Total non-current assets 94,828 105,000 
Current assets
Cash and cash equivalents 13 26,599  32,643 
Term bank deposit 13 –  1,000 
Inventories 14 1,630  3,614 
Other receivables 15 2,125  2,952 
Total current assets 30,354  40,209 
Total assets 125,182 145,209 
Equity and Liabilities
Equity
Share capital 16 1,485  1,485 
Share premium (net of issue costs) 16 165,873  165,873 
Other reserves 17 (13,874) (12,990)
Accumulated loss (30,870) (13,911)
Equity attributable to the shareholders of the parent 122,704 140,457 
Non-controlling interest (114) (92)
Total equity 122,590 140,365 
Non-current liabilities
Asset retirement obligation 162 164 
Total non-current liabilities 162  164 
Current liabilities
Trade and other payables 18 2,430  3,162 
Current income tax liability –  1,518 
Total current liabilities 2,430  4,680 
Total equity and liabilities 125,182 145,209 
Approved by the Board of Directors on 28 March 2011 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive Officer Chief Financial Officer
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Group Balance Sheet 
(presented in US$ 000) Volga Gas plc
22_Annual Report and Accounts 2010
Year ended 31 December Notes 2010 2009
(Loss)/profit before tax and non-controlling interests (22,217) 881 
Adjustments to loss before tax:
Share grant expense 123 72 
Depreciation 1,114 890 
Exploration & evaluation expense 23,737 –
Increase in accruals 130 220 
Foreign exchange differences – (220)
Decrease/(increase) in long-term assets 2,612 770 
Operating cash flow prior to working capital 5,499 2,613 
Working capital changes
Decrease/(increase) in trade and other receivables 730 3,794 
Increase/(decrease) in payables (770) 6 
Increase in inventory 1,963 (2,067)
Cash flow from operations 7,422 4,346 
Income tax paid (92) (389)
Net cash flow from operating activities 7,330 3,957 
Cash flows from investing activities
Expenditure on exploration and evaluation 10 (12,513) (7,048)
Purchase of intangible assets 10 (26) (299)
Purchase of property, plant and equipment 11 (1,446) (12,847)
Maturity of term bank deposit 13 1,000 (1,000)
Net cash used in investing activities (12,985) (21,194)
Cash flows from financing activities
Proceeds from the issue of shares (net of issue costs) – 26,632 
Loans received 373 56
Loans repaid (296) – 
Net cash provided by financing activities 77 26,688 
Effect of exchange rate changes on cash and cash equivalents (355) 99
Net increase/(decrease) in cash and cash equivalents 6,044 9,550 
Cash and cash equivalents at beginning of the year 13 32,643 23,093 
Cash and cash equivalents at end of the year 13 26,599 32,643 
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Group Cash Flow Statement 
(presented in US$ 000) Annual Report and Accounts 2010_ 23
Business Overview Corporate Governance Financial Statements
Company registration number: 05886534
At 31 December Notes 2010 2009
Assets
Non-current assets
Investments in subsidiaries 19 151,034  144,734 
Intercompany Recievables 15,950  15,876 
Total non-current assets 166,984  160,610 
Current assets
Cash and cash equivalents 13 5,292  11,999 
Term bank deposit 13 –  1,000 
Other receivables 38  20 
Total current assets 5,330  13,019 
Total assets 172,314  173,629 
Equity and Liabilities
Equity
Share capital 16 1,485  1,485 
Share premium (net of issue costs) 16 165,873  165,873 
Other reserves 17 5,196  5,073 
Accumulated loss 20 (1,840) (682)
Total equity  170,714  171,749 
Current liabilities
Trade and other payables 1,600  1,666 
Current income tax liability  –  214 
Total current liabilities 1,600  1,880 
Total equity and liabilities 172,314  173,629 
Approved by the Board of Directors on 28 March 2011 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive Officer Chief Financial Officer
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Company Balance Sheet 
(presented in US$ 000) Volga Gas plc
24_Annual Report and Accounts 2010
Year ended 31 December Notes 2010 2009
Loss before tax (1,372) (1,410)
Adjustments to loss before tax:
Share grant expense 123 72 
Increase in accruals 130 220 
Operating cash flow prior to working capital (1,119) (1, 118)
Working capital changes
(Increase)/decrease in trade and other receivables (92) 38 
Decrease in payables (196) (6,231)
Cash flow from operations (1,407) (7,31 1)
Income tax paid – (389)
Net cash flow from operating activities (1,407) (7,700)
Cash flows from investing activities
Maturity/(placement of) term bank deposit 13 1,000 (1,000)
Investments in subsidiaries 19 (6,300) (24,429)
Net cash used in investing activities (5,300) (25,429)
Cash flows from financing activities
Proceeds from the issue of shares (net of issue costs) – 26,632 
Net cash provided by financing activities – 26,632 
Net increase/(decrease) in cash and cash equivalents (6,707) (6,497)
Cash and cash equivalents at beginning of the year 13 11,999 18,496 
Cash and cash equivalents at end of the year 13 5,292 11,999 
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Company Cash Flow Statement 
(presented in US$ 000) Annual Report and Accounts 2010_ 25
Business Overview Corporate Governance Financial Statements
Attributable to the equity shareholders of the Company
Notes
Share
Capital
Share
Premium
Other 
Reserves
Accumulated
 Loss 
Non-controlling 
Interests Total Equity
Opening equity at  
1 January 2009 1,045 39,681 (11,025) (14,143) – 115,558 
Profit for the year –  –  – 232 (92) 140 
Transactions with owners
Share capital issued 16 440 26,560  –  –  – 27,000 
Share issue costs – (368) –  –  – (368)
Share-based payments –  – 72 –  – 72 
Total transactions with owners 440 26,192 72 – – 26,704
Other comprehensive income
Currency translation differences –  – (2,037) –  – (2,037)
Total other  
comprehensive income –  – (2,037) –  – (2,037)
Closing equity at  
31 December 2009 1,485 165,873 (12,990) (13,911) (92) 140,365 
Opening equity at  
1 January 2010 1,485 165,873 (12,990) (13,911) (92) 140,365 
Loss for the year –  –  – (16,869) (22) (16,890)
Transactions with owners
Share-based payments –  – 123  – – 123 
Total transactions with owners –  – 123  – – 123 
Comprehensive income
Currency translation differences –  – (1,007) –  – (1,007)
Total comprehensive income –  – (1,007) –  – (1,007)
Closing equity at  
31 December 2010 1,485 165,873 (13,874) (30,780) (114) 122,590 
Company Statement of Changes in  
Shareholders’ Equity (presented in US$ 000)
Notes
Share
Capital
Share 
Premium
Other
Reserves
Accumulated
Profit/(loss) Total Equity
Opening equity as at 1 January 2009 1,045  139,681  5,001  324  146,051 
Loss for the year – – – (1,006) (1,006)
Share capital issued 440  26,560 – –  27,000 
Share Issue costs – (368) – – (368)
Share-based payments 16 – – 72 –  72 
Closing equity at 31 December 2009 1,485  165,873  5,073 (682) 171,749 
Opening equity as at 1 January 2010 1,485  165,873  5,073 (682) 171,749 
Loss for the year –  –  – (1,372) (1,372)
Share capital issued –  –  –  – – 
Share Issue costs –  –  –  – – 
Share-based payments 16 –  –  123  –  123 
Closing equity at 31 December 2010 1,485  165,873  5,196 (2,054) 170,500 
The accompanying notes on pages 26 to 43 are an integral part of these financial statements.
Group Statement of Changes in Shareholders’  
Equity (presented in US$ 000) Volga Gas plc
26_Annual Report and Accounts 2010
Notes to the IFRS Consolidated Financial Statements 
For the year ended 31 December 2010
1. General information
Volga Gas plc (the “Company” or “Volga”) is a public limited 
company registered in England and Wales with registered 
number 5886534. The company was incorporated on 25 July 
2006. The principal activities of the Company and its 
subsidiaries (the “Group”) are the acquisition, exploration  
and development of hydrocarbon assets and production of 
hydrocarbons in the Volga Region of the Russian Federation.  
Its registered office is at Ground floor, 17–19 Rochester Row, 
London, SW1P 1QT.
The Company is listed on the Alternative Investment Market  
of the London Stock Exchange.
These Group consolidated financial statements were authorised 
for issue by the Board of Directors on 28 March 2011.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation  
of these consolidated financial statements are set out below. 
These policies have been consistently applied to all the years 
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of Volga have been 
prepared in accordance with International Financial Reporting 
Standards, as adopted by the European Union (IFRSs as adopted 
by the EU), IFRIC interpretations, and the Companies Act 2006 
applicable to companies reporting under IFRS. The consolidated 
financial statements have been prepared under the historical 
cost convention, as modified by the revaluation of financial 
assets and financial liabilities (including derivative instruments) 
at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS 
requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgment in the process  
of applying the Group’s accounting policies. The areas involving 
a higher degree of judgment or complexity, or areas where 
assumptions and estimates are significant to the consolidated 
financial statements are disclosed in Note 4.
No income statement is presented for Volga Gas plc as permitted 
by Section 408 of the Companies Act 2006.
The consolidated financial statements have been prepared on 
the going concern basis as the directors have concluded that 
the Group will continue to have access to sufficient funds in 
order to meet its obligations as they fall due for at least the 
foreseeable future.
Disclosure of Impact of New and  
Future Accounting Standards
The following new standards and amendments to standards  
are mandatory for the first time for the financial year beginning  
1 January 2010:
IFRS 3 (revised) – , ‘Business combinations’, and consequential 
amendments to IAS 27, ‘Consolidated and separate financial 
statements’, IAS 28, ‘Investments in associates’, and IAS 31, 
‘Interests in joint ventures’, are effective prospectively to 
business combinations for which the acquisition date is  
on or after the beginning of the first annual reporting period 
beginning on or after 1 July 2009.
The revised standard continues to apply the acquisition 
method to business combinations but with some significant 
changes compared with IFRS 3. For example, all payments  
to purchase a business are recorded at fair value at the 
acquisition date, with contingent payments classified as debt 
subsequently re-measured through the income statement. 
There is a choice on an acquisition-by-acquisition basis to 
measure the non-controlling interest in the acquiree either  
at fair value or at the non-controlling interest’s proportionate 
share of the acquiree’s net assets. All acquisition-related 
costs are expensed. The adoption of IFRS 3 (revised) had no 
impact on the Group’s financial statements as no business 
combinations have been undertaken in the period.
As the Group has adopted IFRS 3 (revised), it is required to 
adopt IAS 27 (revised), ‘consolidated and separate financial 
statements’, at the same time. IAS 27 (revised) requires the 
effects of all transactions with non-controlling interests to be 
recorded in equity if there is no change in control and these 
transactions will no longer result in goodwill or gains and 
losses. The standard also specifies the accounting when 
control is lost. Any remaining interest in the entity is  
re-measured to fair value, and a gain or loss is recognised  
in profit or loss. There has been no impact of IAS 27 (revised) 
on the current period, as none of the non-controlling interests 
have a deficit balance. There have been no transactions 
whereby an interest in an entity is retained after the loss of 
control of that entity; there have been no transactions with 
non-controlling interests.
The following new standards, amendments to standards and 
interpretations are mandatory for the first time for the financial 
year beginning 1 January 2010, but are not currently relevant  
for the Group:
IFRIC 17 , ‘Distributions of non-cash assets to owners’, effective  –
for annual periods beginning on or after 1 July 2009. This is 
not currently applicable to the Group, as it has not made any 
non-cash distributions.
IFRIC 18, ‘Transfers of assets from customers’, effective for  –
transfer of assets received on or after 1 July 2009. This is not 
relevant to the Group, as it has not received any item of PPE 
or cash that must be used only to acquire or construct the 
item of PPE in order to connect to a customer’s network or  
to provide a customer with ongoing access to a supply of 
goods or services (or both). 
‘Additional exemptions for first-time adopters’ (Amendment  –
to IFRS 1) was issued in July 2009. The amendments are 
required to be applied for annual periods beginning on or 
after 1 January 2010. This is not relevant to the Group, as it is  
an existing IFRS preparer.
Improvements to International Financial Reporting Standards  –
2009 were issued in April 2009. The effective dates vary 
standard by standard but most are effective 1 January 2010.
Group Cash-settled Share-based Payment Transactions –  –
Amendments to IFRS 2, Share-based Payment (effective for 
annual periods beginning on or after 1 January 2010). The  Annual Report and Accounts 2010_ 27
Business Overview Corporate Governance Financial Statements
amendments provide a clear basis to determine the 
classification of share-based payment awards in both 
consolidated and separate financial statements. The 
amendments incorporate into the standard the guidance in 
IFRIC 8 and IFRIC 11, which are withdrawn. The amendments 
expand on the guidance given in IFRIC 11 to address plans 
that were previously not considered in the interpretation. The 
amendments also clarify the defined terms in the Appendix to 
the standard.
The following new standards, amendments to standards and 
interpretations have been issued, but are not effective for the 
financial year beginning 1 January 2010 and have not been  
early adopted:
IFRS 9, ‘Financial instruments’, issued in November 2009 and  –
updated in October 2010. This addresses the classification 
and measurement of financial assets and is likely to affect the 
Group’s accounting for its financial assets. The standard is 
not applicable until 1 January 2013 but is available for early 
adoption. This standard has not yet been endorsed by the 
EU. The Group is yet to assess IFRS 9’s full impact. However, 
management’s initial assessment is that IFRS 9 is unlikely to 
have any impact on the Group’s financial statements. The 
Group has not yet decided when to adopt IFRS 9.
Revised IAS 24, ‘Related party disclosures’, issued in  –
November 2009. It supersedes IAS 24, ‘Related party 
disclosures’, issued in 2003. The revised IAS 24 is required  
to be applied from 1 January 2011. Earlier application, in 
whole or in part, is permitted.
‘Classification of rights issues’ (Amendment to IAS 32), issued  –
in October 2009. For rights issues offered for a fixed amount 
of foreign currency, current practice appears to require such 
issues to be accounted for as derivative liabilities. The 
amendment states that if such rights are issued pro rata to  
all the entity’s existing shareholders in the same class for a 
fixed amount of currency, they should be classified as equity 
regardless of the currency in which the exercise price is 
denominated. The amendment should be applied for annual 
periods beginning on or after 1 February 2010. Earlier 
application is permitted.
‘Prepayments of a minimum funding requirement’  –
(Amendments to IFRIC 14), issued in November 2009. The 
amendments correct an unintended consequence of IFRIC 14, 
‘IAS 19 – The limit on a defined benefit asset, minimum funding 
requirements and their interaction’. Without the amendments, 
entities are not permitted to recognise as an asset some 
voluntary prepayments for minimum funding contributions. 
This was not intended when IFRIC 14 was issued, and the 
amendments correct the problem. The amendments are 
effective for annual periods beginning 1 January 2011. Earlier 
application is permitted. The amendments should be applied 
retrospectively to the earliest comparative period presented.
IFRIC 19, ‘Extinguishing financial liabilities with equity  –
instruments’. This clarifies the requirements of IFRSs when 
an entity renegotiates the terms of a financial liability with its 
creditor and the creditor agrees to accept the entity’s shares 
or other equity instruments to settle the financial liability fully 
or partially. The interpretation is effective for annual periods 
beginning on or after 1 July 2010. Earlier application is permitted.
Disclosures—Transfers of Financial Assets – Amendments to  –
IFRS 7 (issued in October 2010 and effective for annual 
periods beginning on or after 1 July 2011). The amendment 
requires additional disclosures in respect of risk exposures 
arising from transferred financial assets. The amendment 
includes a requirement to disclose by class of asset the 
nature, carrying amount and a description of the risks and 
rewards of financial assets that have been transferred to 
another party yet remain on the entity’s balance sheet. 
Disclosures are also required to enable a user to understand 
the amount of any associated liabilities, and the relationship 
between the financial assets and associated liabilities. Where 
financial assets have been derecognised but the entity is still 
exposed to certain risks and rewards associated with the 
transferred asset, additional disclosure is required to enable 
the effects of those risks to be understood. This standard has 
not yet been adopted by the EU.
Improvements to International Financial Reporting Standards  –
2010 were issued in May 2010. The effective dates vary 
standard by standard but most are effective 1 January 2010.
Management expects that these new pronouncements will have 
no impact on the financial statements of the Group.
2.2 Consolidation
(a) Subsidiaries
The consolidated financial statements include the financial 
statements of the Company and its subsidiaries. Subsidiaries are 
all entities in which the Group directly or indirectly owns more 
than 50 percent of the voting stock or otherwise has the power 
to govern the financial and/or operating policies. Subsidiaries 
are fully consolidated from the date on which control is 
transferred to the Group. They are de-consolidated from the 
date that control ceases.
The group uses the acquisition method of accounting to 
account for business combinations. The consideration 
transferred for the acquisition of a subsidiary is the fair values of 
the assets transferred, the liabilities incurred and the equity 
interests issued by the group. The consideration transferred 
includes the fair value of any asset or liability resulting from a 
contingent consideration arrangement. Acquisition-related 
costs are expensed as incurred. Identifiable assets acquired 
and liabilities and contingent liabilities assumed in a business 
combination are measured initially at their fair values at the 
acquisition date. On an acquisition-by-acquisition basis, the 
group recognises any non-controlling interest in the acquiree 
either at fair value or at the non-controlling interest’s 
proportionate share of the acquiree’s net assets.
Investments in subsidiaries are accounted for at cost less 
impairment. Cost is adjusted to reflect changes in consideration 
arising from contingent consideration amendments.
Cost also includes direct attributable costs of investment.
The excess of the consideration transferred, the amount of any 
non-controlling interest in the acquiree and the acquisition-date 
fair value of any previous equity interest in the acquiree over the 
fair value of the group’s share of the identifiable net assets 
  Volga Gas plc
28_Annual Report and Accounts 2010
2.2 Consolidation continued
acquired is recorded as goodwill. If this is less than the fair value 
of the net assets of the subsidiary acquired in the case of a 
bargain purchase, the difference is recognised directly in the 
statement of comprehensive income.
Inter-company transactions, balances and unrealised gains on 
transactions between Group companies are eliminated; unrealised 
losses are also eliminated unless the cost cannot be recovered.
The Company and its subsidiaries outside the Russian Federation 
maintain their financial statements in accordance with IFRS as 
adopted by the EU. The Russian subsidiaries of the Group 
maintain their statutory accounting records in accordance with 
the Regulations on Accounting and Reporting of the Russian 
Federation. The consolidated financial statements are based on 
these statutory accounting records, appropriately adjusted and 
reclassified for fair presentation in accordance with International 
Financial Reporting Standards as adopted by the EU.
A list of the Company’s subsidiaries is provided in Note 19.
2.3 Segment reporting
Segmental reporting follows the Group’s internal  
reporting structure.
Operating segments are defined as components of the Group 
where separate financial information is available and reported 
regularly to the chief operating decision maker (“CODM”), which 
is determined to be the Board of Directors of the Company. The 
Board of Directors which decide how to allocate resources and 
assesses operational and financial performance using the 
information provided. 
The CODM receives monthly IFRS based financial information 
for the Group and its development and production entities. 
There were two development and production entities during 
both 2009 and 2010. Management has determined that the 
operations of these production and development entities are 
sufficiently homogenous (both are concerned with upstream oil 
and gas development and production activities) for these to be 
aggregated for the purpose of IFRS 8, “Operating Segments”. 
The Group has other entities that engage as either head office 
or in a corporate capacity or as holding companies. 
Management has concluded that due to application of the 
aggregation criteria that separate financial information for 
segments is not required. 
No geographic segmental information is presented as all of the 
companies operating activities are based in the Russian 
Federation.
Management has determined therefore that the operations of 
the Group comprise one class of business, being oil and gas 
exploration, development and production and the Group 
operates in only one geographic area – the Russian Federation.
There is no concentration of sales with any major customer that 
is required to be separately disclosed.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s 
entities are measured using the currency of the primary economic 
environment in which the entity operates (“the functional 
currency”). The consolidated financial statements are presented 
in US dollars, which is the Company’s functional and the 
Group’s presentation currency.
The functional currency of the Group’s subsidiaries that are 
incorporated in the Russian Federation is the Russian ruble 
(“RUR”). It is the Management’s view that the RUR best reflects 
the financial results of its Cyprus subsidiaries because they are 
dependant on entities based in Russia that operate in an RUR 
environment in order to recover their investments. As a result, the 
functional currency of the subsidiaries continues to be the RUR.
(b) Transactions and balances
Foreign currency transactions are translated into the functional 
currency using the exchange rates prevailing at the dates of the 
transactions. Foreign exchange gains and losses resulting from 
the settlement of such transactions and from the translation at  
year-end exchange rates of monetary assets and liabilities 
denominated in foreign currencies are recognised in the income 
statement. Translation differences on non-monetary financial 
assets and liabilities are reported as part of the fair value gain  
or loss.
Foreign exchange gains and losses that relate to cash and cash 
equivalents, borrowings and other foreign exchange gains and 
losses are presented in the income statement within “Other gains 
and losses”.
(c) Group companies
The results and financial position of all the Group entities (none 
of which has the currency of a hyper-inflationary economy) that 
have a functional currency different from the presentation currency 
are translated into the presentation currency as follows:
assets and liabilities for each balance sheet presented are (i) 
translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are (ii) 
translated at average exchange rates (unless this average is 
not a reasonable approximation of the cumulative effect of 
the rates prevailing on the transaction dates, in which case 
income and expenses are translated at the rate on the dates 
of the transactions); and
all resulting exchange differences are recognised in other (iii) 
comprehensive income.
The major exchange rates used for the revaluation of the closing 
balance sheet at 31 December 2010 were:
GBP1: US$1.5523 (2009: GBP1: US$1.5653) –
US$1: RUR.30.4769 (2009: US$1: RUR.30.2442) –
2.5 Oil and gas exploration assets
The Company applies the successful efforts method of 
accounting for Exploration and Evaluation (“E&E”) costs, in 
accordance with IFRS 6 “Exploration for and Evaluation of 
Mineral Resources”. Costs are accumulated on a field-by-field 
basis. Costs directly associated with an exploration well, including 
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 29
Business Overview Corporate Governance Financial Statements
certain geological and geophysical costs, and exploration and 
property leasehold acquisition costs, are capitalised until the 
determination of reserves is evaluated. If it is determined that a 
commercial discovery has not been achieved, these costs are 
charged to expense after the conclusion of appraisal activities. 
Exploration costs such as geological and geophysical that  
are not directly related to an exploration well are expensed  
as incurred.
Capital expenditure is recognised as property, plant and 
equipment or intangible assets in the financial statements 
according to the nature of the expenditure and the stage  
of development of the associated field, i.e. exploration, 
development, production.
Once commercial reserves are found, exploration and evaluation 
assets are tested for impairment and transferred to development 
tangible and intangible assets. No depreciation or amortisation 
is charged during the exploration and evaluation phase.
(a) Development tangible and intangible assets
Expenditure on the construction, installation or completion of 
infrastructure facilities such as platforms, pipelines and the drilling 
of development wells into commercially proven reserves, is 
capitalised within property, plant and equipment and intangible 
assets depending on the nature of the expenditure. When 
development is completed on a specific field, it is transferred to 
producing assets as part of property and equipment or 
intangible assets. No depreciation or amortisation is charged 
during the development phase.
(b) Oil and gas production assets
Development and production assets are accumulated generally 
on a field by field basis and represent the cost of developing  
the commercial reserves discovered and bringing them into 
production together with E&E expenditures incurred in finding 
commercial reserves and transferred from the intangible E&E 
assets as described above.
The cost of development and production assets also includes 
the cost of acquisitions and purchases of such assets, directly 
attributable overheads, finance costs capitalised and the cost of 
recognising provisions for future restoration and decommissioning.
Where major and identifiable parts of the production assets 
have different useful lives, they are accounted for as separate 
items of property, plant and equipment. Costs of minor repairs 
and maintenance are expensed as incurred.
(c) Depreciation/amortisation
Oil and gas properties intangible assets are depreciated or 
amortised using the unit-of-production method. Unit-of-production 
rates are based on proved and probable reserves, which are oil, 
gas and other mineral reserves estimated to be recovered from 
existing facilities using current operating methods. Oil and gas 
volumes are considered produced once they have been measured 
through meters at custody transfer or sales transaction points at 
the outlet valve on the field storage tank.
(d) Impairment – exploration and evaluation assets
Exploration and evaluation assets are tested for impairment prior 
to reclassification to development tangible or intangible assets, 
or whenever facts and circumstances indicate that an impairment 
condition may exist. An impairment loss is recognised for the 
amount by which the exploration and evaluation assets’ carrying 
amount exceeds their recoverable amount. The recoverable 
amount is the higher of the exploration and evaluation assets’ 
fair value less costs to sell and their value in use. For the purposes 
of assessing impairment, the exploration and evaluation assets 
subject to testing are grouped with existing cash-generating 
units of production fields that are located in the same 
geographical region.
(e) Impairment – proved oil and gas production properties 
and intangible assets
Proven oil and gas properties and intangible assets are reviewed 
for impairment whenever events or changes in circumstances 
indicate that the carrying amount may not be recoverable.  
An impairment loss is recognised for the amount by which the 
asset’s carrying amount exceeds its recoverable amount. The 
recoverable amount is the higher of an asset’s fair value less 
costs to sell and value in use. The cash generating unit applied 
for impairment test purposes is generally the field, except that  
a number of field interests may be grouped together where the 
cash flows of each field are interdependent, for instance where 
surface infrastructure is used by one or more field in order to 
process production for sale.
(f) Decommissioning
Provision is made for the cost of decommissioning assets at the 
time when the obligation to decommission arises. Such provision 
represents the estimated discounted liability (the discount rate 
used currently being at 10% per annum) for costs which are 
expected to be incurred in removing production facilities and 
site restoration at the end of the producing life of each field.  
A corresponding item of property, plant and equipment is also 
created at an amount equal to the provision. This is subsequently 
depreciated as part of the capital costs of the production facilities. 
Any change in the present value of the estimated expenditure 
attributable to changes in the estimates of the cash flow or the 
current estimate of the discount rate used are reflected as  
an adjustment to the provision and the property, plant and 
equipment. The unwinding of the discount is recognised  
as a finance cost.
2.6 Other business and corporate assets
Property, plant and equipment not associated with exploration 
and production activities are carried at cost less accumulated 
depreciation. These assets are also evaluated for impairment 
when circumstances dictate.
Land is not depreciated. Depreciation of other assets is 
calculated on a straight line basis as follows:
Machinery and equipment 6–10 years
Office equipment in excess of US$5,000 3–4 years
Vehicles and other 2–7 years Volga Gas plc
30_Annual Report and Accounts 2010
2.7 Financial assets
The Group classifies its financial assets in the following categories: 
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial 
assets held for trading. This category comprises derivatives 
unless they are effective hedging instruments. The Group had  
no financial assets in this class as at 31 December 2009 or  
31 December 2010.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with 
fixed or determinable payments that are not quoted in an active 
market. This category comprises trade and other receivables 
and cash and cash equivalents in balance sheet.
2.8 Derivative financial instruments
Derivative financial assets and financial liabilities are financial 
instruments whose value changes in response to an underlying 
variable, require little or no initial investment and are settled in 
the future. The Company has used derivatives such as foreign 
exchange forward contracts to manage risks of changes in foreign 
exchange rates. The Group has not applied hedge accounting  
in respect of forward foreign exchange contracts. Consequently, 
movements in the fair value of derivative instruments are 
immediately recognised in profit and loss.
2.9 Acquisitions, asset purchases and disposals
Acquisitions of oil and gas properties are accounted for under 
the purchase method where the business meets the definition  
of a business combination.
Transactions involving the purchases of an individual field interest, 
or a group of field interests, that do not qualify as a business 
combination are treated as asset purchases, irrespective of 
whether the specific transactions involved the transfer of the 
field interests directly or the transfer of an incorporated entity. 
Accordingly, no goodwill or deferred tax gross up arises. The 
purchase consideration is allocated to the assets and liabilities 
purchased on an appropriate basis.
Proceeds on disposal are applied to the carrying amount of the 
specific intangible asset or development and production assets 
disposed of and any surplus is recorded as a gain on disposal in 
the income statement.
2.10 Inventories
Crude oil inventories are stated at the lower of cost and net 
realisable value. Materials and supplies inventories are recorded 
at average cost and are carried at amounts which do not exceed 
the expected recoverable amount from use in the normal course  
of business. Cost comprises direct materials and, where 
applicable, direct labour plus attributable overheads based on a 
normal level of activity and other costs associated in bringing 
inventories to their present location and condition.
2.11 Trade and other receivables
Trade and other receivables are recorded initially at fair value 
and subsequently measured at amortised cost using the 
effective interest method, less provision for impairment. A 
provision for impairment of trade receivables is established 
when there is objective evidence that the Group will not be able 
to collect all amounts due according to the original terms of the 
receivables. The amount of the provision is the difference 
between the asset’s carrying amount and the present value of 
estimated future cash flows, discounted at the original effective 
interest rate.
2.12 Cash and cash equivalents
Cash and cash equivalents include cash in hand, and deposits 
held at call with banks.
2.13 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares 
or options are shown in equity as a deduction, net of tax, from 
the proceeds.
2.14 Trade payables
Trade payables are recognised initially at fair value and 
subsequently measured at amortised cost using the effective 
interest method. 
2.15 Current and deferred income tax
The tax expense for the period comprises current and deferred 
tax. Tax is recognised in the income statement, except to the  
extent that it relates to items recognised in other comprehensive 
income or directly in equity. In this case the tax is also recognised 
in other comprehensive income or directly in equity, respectively. 
The current income tax charge is calculated on the basis of the 
tax laws enacted or substantively enacted at the balance sheet 
date in the countries where the Company’s subsidiaries and 
associates operate and generate taxable income. Management 
periodically evaluates positions taken in tax returns with respect 
to situations in which applicable tax regulation is subject to 
interpretation. It establishes provisions where appropriate on 
the basis of amounts expected to be paid to the tax authorities. 
Deferred income tax is recognised, using the liability method,  
on temporary differences arising between the tax bases of assets 
and liabilities and their carrying amounts in the consolidated 
financial statements. However, the deferred income tax is not 
accounted for if it arises from initial recognition of an asset or 
liability in a transaction other than a business combination that at  
the time of the transaction affects neither accounting nor taxable 
profit or loss. Deferred income tax is determined using tax rates 
(and laws) that have been enacted or substantially enacted by 
the end of the reporting period and are expected to apply when 
the related deferred income tax asset is realised or the deferred 
income tax liability is settled. 
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 31
Business Overview Corporate Governance Financial Statements
Deferred income tax assets are recognised to the extent that  
it is probable that future taxable profit will be available against  
which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there 
is a legally enforceable right to offset current tax assets against 
current tax liabilities and when the deferred income taxes assets 
and liabilities relate to income taxes levied by the same taxation 
authority on either the same taxable entity or different taxable 
entities where there is an intention to settle the balances on a 
net basis.
2.16 Employee benefits
(a) Share-based compensation
The fair value of the employee services received in exchange for 
the grant of the options is recognised as an expense. The total 
amount to be expensed over the vesting period is determined 
by reference to the fair value of the options granted, excluding 
the impact of any non-market vesting conditions (for example, 
profitability and sales growth targets). Non-market vesting 
conditions are included in assumptions about the number  
of options that are expected to vest. The option plan currently  
in place for certain of the Directors is an equity settled share 
option plan.
The Company measures the equity instruments granted to 
employees at the fair value at grant date. The fair value of 
fully-vested shares is expensed immediately. The fair value  
of shares with vesting requirements is estimated using  
Black-Scholes option pricing model. This value is recognised  
as an expense over the vesting period on a straight-line basis. 
The estimate is revised, as necessary, if subsequent information 
indicates that the number of equity instruments expected to 
vest differs from previous estimates.
(b) Social obligations
Wages, salaries, contributions to the Russian Federation state 
pension and social insurance funds, paid annual leave, sick leave 
and bonuses are accrued in the year in which the associated 
services are rendered by the employees of the Group.
2.17 Revenue recognition
Revenue comprises the fair value of the consideration received 
or receivable for the sale of oil and gas in the ordinary course  
of the Group’s activities. Revenue is shown net of value added 
tax, returns, rebates and discounts and after eliminating sales  
within the Group.
(a) Sales of oil and gas 
Revenue from the sale of oil or gas is recognised when the oil/ 
gas is delivered to customers and title has transferred. Revenue 
is stated net of value-added tax. For oil sales, this is at the 
physical point of delivery, i.e. the loading of a customer’s truck. 
For gas sales, this is typically the point of entry to the gas 
distribution system. In 2009 and 2010 all of the Group’s revenue 
related to oil sales collected directly by customers.
(b) Interest income
Interest income is recognised on a time-proportion basis using 
the effective interest method.
2.18 Prepayments
Prepayments are carried at cost less provision for impairment.  
A prepayment is classified as non-current when the goods or 
services relating to the prepayment are expected to be obtained 
after one year, or when the prepayment relates to an asset which 
will itself be classified as non-current upon initial recognition. 
Prepayments to acquire assets are transferred to the carrying 
amount of the asset once the Group has obtained control of the 
asset and it is probable that future economic benefits associated 
with the asset will flow to the Group. Other prepayments are 
written off to profit or loss when the goods or services relating 
to the prepayments are received. If there is an indication that the 
assets, goods or services relating to a prepayment will not be 
received, the carrying value of the prepayment is written down 
accordingly and a corresponding impairment loss is recognised 
in profit or loss for the year.
2.19 Provisions
Provisions for environmental restoration, restructuring costs  
and legal claims are recognised when: the group has a present 
legal or constructive obligation as a result of past events; it is 
probable that an outflow of resources will be required to settle 
the obligation; and the amount has been reliably estimated. 
Restructuring provisions comprise lease termination penalties 
and employee termination payments. Provisions are not 
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood 
that an outflow will be required in settlement is determined by 
considering the class of obligations as a whole. A provision is 
recognised even if the likelihood of an outflow with respect to any 
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the 
expenditures expected to be required to settle the obligation 
using a pre-tax rate that reflects current market assessments of 
the time value of money and the risks specific to the obligation. 
The increase in the provision due to passage of time is 
recognised as interest expense.
3. Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: 
market risk (including currency risk, price risk, and cash flow 
interest rate risk), credit risk, and liquidity risk. The Group’s overall 
risk management programme focuses on the unpredictability of 
financial markets and seeks to minimise potential adverse effects 
on the Group’s financial performance. 
(a) Market Risk
(i) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from 
currency exposures, primarily with respect to the Russian ruble. 
Foreign exchange risk arises from future commercial transactions, 
recognised assets and liabilities.
At 31 December 2010, if the US dollar had weakened/strengthened 
by 5% against the RUR with all other variables held constant, 
post-tax profit for the year would have been US$751,000  Volga Gas plc
32_Annual Report and Accounts 2010
3.1 Financial risk factors continued
(2009: US$812,000) higher/lower, mainly as a result of foreign exchange gains/losses on translation of RUR denominated trade 
payables and financial assets. At 31 December 2010, if the US dollar had weakened/strengthened by 5% against the Pound Sterling 
(“GBP”) with all other variables held constant, post-tax profit for the year would have been US$16,000 (2009: US$14,000) higher/
lower, mainly as a result of foreign exchange gains/losses on translation of GBP denominated trade payables and financial assets.
The following table shows the currency structure of financial assets and liabilities:
 
At 31 December 2010
Rubles
US$ 000
US Dollars
US$ 000
Sterling
US$ 000
Total
US$ 000
Financial assets
Cash and cash equivalents 6,008 20,100 491 26,599 
Term bank deposit – – – – 
Total financial assets 6,008 20,100 491 26,599 
Financial liabilities (before provision for UK taxes) 2,174 244  12  2,430 
 
At 31 December 2009
Rubles
US$ 000
US Dollars
US$ 000
Sterling
US$ 000
Total
US$ 000
Financial assets
Cash and cash equivalents 4,032 28,219 392 32,643 
Term bank deposit – 1,000 – 1,000 
Total financial assets 4,032 29,219 392 33,643 
Financial liabilities (before provision for UK taxes) 3,060 56 46 3,162 
No foreign exchange forward contracts were used in 2010 or 2009.
(ii) Price risk 
The Group is not exposed to price risk as it does not hold financial instruments of which the fair values or future cash flows will be 
affected by changes in market prices.
(iii) Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets and liabilities, the Group’s income and operating cash flows are 
substantially independent of changes in market interest rates.
(b) Credit risk
The Group’s maximum credit risk exposure is the fair value of each class of assets, presented in note 3.1(a)(i) of US$26,599,000 and 
US$33,643,000 at 31 December 2010 and 2009 respectively. 
The Group’s principal financial asset is cash and credit risk arises from cash and cash equivalents and deposits with banks and 
financial institutions. It is the Group’s policy to monitor the financial standing of these assets on an on-going basis. Bank balances 
are held with reputable and established financial institutions.
The Group’s oil sales are undertaken on a prepaid basis and accordingly the Group has no trade receivables and consequently no 
credit risk associated with trade receivables.
 
Rating of financial institution (Fitch)
31 December 
2010
31 December
 2009
AA+ – – 
AA- 13,908 13,552 
A- – – 
BBB+ 7,691 19,752 
Other – 339 
Total bank balance 26,599 33,643 
(c) Liquidity risk
Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group’s liquidity requirements 
to ensure it has sufficient cash to meet operational needs. The Group believes it has at least sufficient liquidity headroom to fund its 
currently planned exploration and development activities.
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 33
Business Overview Corporate Governance Financial Statements
The Group expects to fund its exploration and development 
programme, as well as its administrative and operating expenses, 
through 2011 using a combination of existing working capital 
and expected proceeds from the sale of oil and gas production. 
If the Group is unsuccessful in generating enough liquidity to 
fund its expenditures, the Group’s ability to execute its long-term 
growth strategy could be significantly affected. The Group may 
need to raise additional equity or debt finance as appropriate to 
fund investments beyond its current commitments.
3.2 Capital risk management
The Group’s objectives when managing the balance of equity 
and debt capital are (a) to safeguard the Group’s ability to continue 
as a going concern, (b) provide returns for shareholders and 
benefits for other stakeholders and (c) to maintain an optimal 
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may 
adjust the amount of dividends paid to shareholders, return capital 
to shareholders, issue new shares or sell assets to reduce debt. 
To date the Group has been funded entirely by equity capital.
3.3 Fair value estimation
Effective 1 January 2009, the Group adopted the amendment  
to IFRS 7 for financial instruments that are measured in the 
balance sheet at fair value, this requires disclosure of fair  
value measurements by level of the following fair value 
measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical  –
assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that  –
are observable for the asset or liability, either directly (that is, 
as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on  –
observable market data (that is, unobservable inputs) (level 3).
The Group has no financial assets and liabilities that are required 
to be measured at fair value.
4. Critical accounting estimates and judgments
The Group makes estimates and assumptions concerning the 
future. The resulting accounting estimates will, by definition, 
seldom equal the related actual results. The estimates and 
assumptions that have a significant risk of causing a material 
adjustment to the carrying amounts of assets and liabilities within 
the next financial year are discussed below.
(a) Carrying value of fixed assets/impairment
Fixed assets are assessed for impairment when events and 
circumstances indicate that an impairment condition may exist. 
The carrying value of fixed assets is evaluated by reference to 
their value in use and primarily looks to the present value of 
management’s best estimate of the cash flows expected to be 
generated from the asset. In identifying cash flows management 
firstly determine the cash-generating unit or group of assets that 
give rise to the cash flows. The cash-generating unit is the lowest 
level of asset at which independent cash flows can be generated.
The estimation of forecast cash flows involves the application of 
a number of significant judgements and estimates to a number 
of variables including production volumes, commodity prices, 
operating costs, capital investment, hydrocarbon reserves 
estimates, inflation and discount rates. In addition, judgement is 
applied in determining the cash-generating unit to be assessed 
for impairment.
(b) Estimation of oil and gas reserves
Estimates of oil and gas reserves are inherently subjective and 
subject to periodic revision. In addition, the results of drilling and 
other exploration or development activity will often provide 
additional information regarding the Group’s reserve base that 
may result in increases or decreases to reserve volumes. Such 
revisions to reserves can be significant and are not predictable 
with any degree of certainty. Management considers the 
estimation of reserves to represent a significant judgement in 
the context of the financial statements as reserve volumes are 
used as the basis for assessing the useful life of oil and gas 
assets, applying depreciation to oil and gas assets and in 
assessing the carrying value of oil and gas assets. Decreases in 
reserve estimates can lead to significant impairment of oil and 
gas assets where revisions (positive or negative) can have a 
significant effect on depreciation rates from period to period. 
(c) Income taxes
Significant judgement is frequently required in estimating provisions 
for deferred taxes. This process involves an assessment of 
temporary differences resulting from differing treatment of items 
for tax and accounting purposes. These differences result in 
deferred tax assets and liabilities, which are included within the 
balance sheet.
(d) Classification and carrying value of the advance to Trans 
Nafta (security deposit on acquisition of fixed assets)
In 2008, the Group advanced RUR 600 million to Trans Nafta  
(TN) in accordance with a sale and purchase agreement for  
the acquisition of a 75% interest in a gas processing unit being 
constructed by TN. This amount was classified as a security 
deposit (prepayment for fixed assets). In 2009, 2010 and 2011 to 
date negotiations regarding the acquisition have continued with 
TN. In May 2010, GNS initiated court action because it 
considered that TN had not complied with the requirements of 
the original purchase agreement with regard to the completion 
and registration of the sale of the GPU interest. In August 2010, 
the Group obtained court rulings in its favour related to the 
repayment of the advance (plus interest) by TN to the Group. 
The rulings were upheld by the Court of Cassation in Moscow  
in February 2011. Notwithstanding the court rulings obtained, 
management’s intention remains to acquire the interest in the 
GPU and accordingly has continued to present the advance 
made as a prepayment. Management considers the outcome  
of negotiations with TN to represent a significant judgement in 
the context of the financial statement as the outcome of the 
negotiations may affect the carrying value of the asset recorded 
or result in settlement other than by way of asset purchase. Volga Gas plc
34_Annual Report and Accounts 2010
5. Cost of sales and administrative expenses – Group
Cost of sales and administrative expenses are as follows:
 
Year ended 31 December
2010
US$000
2009
US$000
Cost of sales 6,840 5,775
Exploration & evaluation expenses 23,937 1,466
Operating and administrative expenses 4,733 3,728
Total operating and administrative expenses 35,510 10,969
Total operating and administrative expenses are analysed as follows:
 
Year ended 31 December
2010
US$000
2009
US$000
Exploration & evaluation (a) 23,937 1,466
Mineral extraction tax 5,254 4,465
Field operating expenses 436 327
Depreciation & amortisation (f) 1,037 881
Salaries & staff benefits (b) 1,171 938
Directors’ emoluments and other benefits (c) 942 857
Audit fees (d) 295 285
Taxes other than payroll and mineral extraction 245 112
Legal & consulting services (e) 1,181 410
Other 1,012 1,228
Total 35,510 10,969
(a) Exploration and evaluation
The principal component of the 2010 exploration and evaluation expense is the impairment charge on the carrying value of intangible 
assets relating to the Grafovskaya #1 well. This includes the cost of seismic studies as well as costs of drilling and testing operations 
on the well. In 2009 expenditure on seismic studies certain drilling expenditures relating to supra-salt exploration on the Karpenskiy 
Licence were expensed as management considered that the expenditure was not related closely enough to specific oil and gas 
reserves to allow its capitalisation in accordance with IFRS 6 ‘Exploration for and evaluation of mineral resources’.
(b) Staff and salaries
The average monthly number of employees (including Executive Directors) employed by the Group was:
Year ended 31 December 2010 2009
Exploration and production 28 29
Administration and support 16 15
Total 44 44
Their aggregate remuneration (excluding Executive Directors) comprised:
 
Year ended 31 December
2010
US$000
2009
US$000
Wages and salaries 909 716
Payroll taxes & social contribution 210 136 
Staff benefits 52 56 
Total 1,171 908
The average monthly number of employees employed by the Company was:
Year ended 31 December 
 2010 2009
Administration and support 2 2
Only directors are employed by the Company. 
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 35
Business Overview Corporate Governance Financial Statements
(c) Directors’ emoluments and other benefits
Details of Directors emoluments and other benefits for the years ended 31 December 2010 and 31 December 2009 are provided  
in the Directors’ Remuneration Report. Included in Directors’ emoluments were share grant expenses of US$123,000  
(2009: US$72,000).
(d) Audit Fees – Group and Company
Disclosure of the fees paid to the Company’s auditors and its associates is given in Note 21.
(e) Legal expense
An amount of US$1,181,000 is included in legal and consultancy expenses in 2010. The major proportion of this in this was in respect 
of the court proceedings brought by the Group against the Trans Nafta group. The costs include legal and other consultation services 
related to preparation for the court proceedings.
(f) Depreciation 
Substantially all depreciation relates to oil and gas assets and is included within cost of sales.
6. Finance income – Group
Finance income comprises interest earned during the period on cash balances with different financial institutions (Note 13).
7. Other gains and losses – Group
 
Year ended 31 December
2010
US$ 000
2009
US$ 000
Foreign exchange gain 81 163 
Other gains 16 20 
Total other gains and losses 97 183 
8. Current and deferred income tax – Group
 
Year ended 31 December 
2010
US$ 000
2009
US$ 000
Current tax:
Current income tax – (584)
Adjustments to tax charge in respect of prior periods 1,518 563 
Total current tax 1,518 (21)
Deferred tax:
Origination and reversal of timing differences 3,808 (716)
Total deferred tax 3,808 (716)
Total tax credit/(charge) 5,326 (737)
The tax charge in the Group income statement differs from the theoretical amount that would arise using the weighted average tax 
rate applicable to profits of the consolidated entities as follows:
 
Year ended 31 December 
2010
US$ 000
2009
US$ 000
Profit/(loss) before income tax and minority interest (22,217) 881 
Tax calculated at domestic tax rates applicable to (profits)/losses in the respective countries 4,367 (163)
Tax effect of items which are not deductible or assessable for tax purposes:
Additional deemed taxable income – (469)
Non-deductible expenses (124) (218)
Current tax – adjustments in respect of prior years 1,518 563 
Tax losses for which no deferred tax asset was recognised (433) (400)
Other tax adjustments – (50)
Income tax credit/(charge) 5,326 (737)
The weighted average applicable tax rate was 19.6% (2009: 18.5%). Volga Gas plc
36_Annual Report and Accounts 2010
8. Current and deferred income tax – Group continued
Deferred taxation is attributable to the temporary differences that exist between the carrying amounts of assets and liabilities for 
financial reporting purposes and the amounts used for tax purposes. The tax effects of temporary differences that give rise to 
deferred taxation are presented below: 
31 December
2010
Differences
recognition 
and reversal
31 December
2009
Differences
recognition 
and reversal
31 December
2008
Tax effects of taxable temporary differences:
Exploration assets (698) 682 (1,380) (1,160) (220)
Inventories (13) (8) (5) (12) 7 
Total (711) 674 (1,385) (1,172) (213)
Tax effect of deductible temporary differences:
Tax losses carry forward 5,271 3,154  2,117  261  1,856 
Trade and other receivables 342 2 340 (18) 358 
Property, plant and equipment 196  64  132  130  2 
Share grant expenses 7 –  7  7  – 
Total 5,816  3,220  2,596  380  2,216 
Net tax effect of temporary differences 5,105 3,894 1,211 (792) 2,003 
Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit 
through the future taxable profits is probable. Tax losses in respect of Cyprus and the UK do not expire. The group has not recognised 
a deferred tax asset of US$750K in respect of tax losses and other short term timing differences in the UK (2009: US$428K).
9. Basic and diluted (loss)/profit per share – Group
Profit per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average  
number of ordinary and diluted shares in issue during the year excluding Ordinary Shares purchased by the Company and  
held as treasury shares.
Year ended 31 December 2010 2009
Net (loss)/profit attributable to equity shareholders (per share) (0.21) 0.004
Net (loss)/profit attributable to equity shareholders (16,869) 232 
Basic weighted number of shares 81,017,800 66,915,354
10. Intangible assets – Group
Intangible assets represent exploration and evaluation assets such as licenses, studies and exploratory drilling, which are stated  
at historical cost.
Work in 
progress:
exploration 
and evaluation
Exploration and
 evaluation
Development 
assets
Producing 
assets Total
At 1 January 2009 5,072 7,244 18,280 – 30,596 
Additions 9,147 679 290  9 10,125 
Disposals (197) – – – (197)
Transfers – (1,576) –  1,576 – 
At 31 December 2009 14,022 6,347 18,570  1,585 40,524 
Accumulated amortisation 
At 1 January 2009 – – – – – 
Depreciation – – – (55) (55)
At 31 December 2009 – – – (55) (55)
Exchange differences 306 (252) (507) 77 (376)
At 31 December 2009 14,328 6,095 18,063  1,607 40,093 
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 37
Business Overview Corporate Governance Financial Statements
Work in 
progress:
exploration 
and evaluation
Exploration and
 evaluation
Development
 assets
Producing 
assets Total
At 1 January 2010 14,328 6,095 18,063 1,664 40,150 
Additions 12,496 26 26 – 12,548 
Transfers – – – – – 
At 31 December 2010 26,824 6,121 18,089 1,664 52,698 
Accumulated amortisation and impairment
At 1 January 2010 – – – (57) (57)
Impairment charge (23,305) – – – (23,305)
Depreciation   (98) (98)
At 31 December 2010 (23,305) – – (155) (23,460)
Exchange differences (75) (48) (138) (12) (273)
At 31 December 2010 3,444 6,073 17,951 1,497 28,965 
The impairment in 2010 relates to the write off of the Grafovskaya exploration well on the Karpenskiy licence and associated costs. 
The Grafovskaya well was the first exploration well on the Yuzhny Ershovskoye prospect. It did not encounter commercial quantities 
of hydrocarbons and, as a result, the well and associated costs have been written off. Approximately US$1,995,000 of seismic 
costs related to the unexplored portion of the Karpenskiy licence continue to be included within exploration and evaluation assets.
11. Property, plant and equipment – Group
Movements in property, plant and equipment, for the years ended 31 December 2010 and 2009 are as follows:
Cost
Development
 assets 
 Land &
Buildings 
Producing
assets  Other  Total 
At 1 January 2009 20,442 616 5,054 546 26,658 
Additions 13,298 157 81 28  13,564 
Disposals (1,445) – (8) – (1,453)
Transfers (6,177) – 6,177 – – 
At 31 December 2009 26,118 773 11,304 574 38,769 
Accumulated depreciation 
At 1 January 2009 – – (80) (28) (108)
Depreciation – – (822) (13) (835)
At 31 December 2009 – – (902) (41) (943)
Exchange adjustments (297) (10) 125 (16) (198)
At 31 December 2009 25,821 763 10,527 517 37,628 
Cost Total
At 1 January 2010 25,821 764 11,474 560 38,619 
Additions 1,287 313 – – 1,600 
Disposals (339) – (94) – (433)
Transfers (1,012) – 982 30 – 
At 31 December 2010 25,757 1,077 12,362 590 39,786 
Accumulated depreciation 
At 1 January 2010 – – (947) (43) (990)
Depreciation – – (998) (18) (1,016)
At 31 December 2009 – – (1,945) (61) (2,006)
Exchange adjustments (194) (7) (82) (4) (287)
At 31 December 2010 25,563 1,070 10,335 525 37,493  Volga Gas plc
38_Annual Report and Accounts 2010
12. Non-current assets
(a) Other non-current assets – Group
 
As at 31 December
2010
US$ 000
2009
US$ 000
VAT recoverable 3,572 6,189
Other non-current assets 6 40
Total other non-current assets 3,578 6,229
Management believes that it may not be able to recover all VAT specific to license and E&E contractors’ payments within the 12 months 
of the balance sheet date. Therefore this VAT is classified as a non-current asset.
(b) Security deposit on acquisition of fixed assets – US$19.7 million (2009: US$19.8 million) 
The security deposit on acquisition of fixed assets of US$19.7 million (2009: US$19.8 million) relates to an advance of RUR 600 
million that was paid by the Group to Trans Nafta in 2008. The payment was for the Group’s share of costs associated with the 
construction of a Gas Processing Unit (“GPU”) to be jointly owned by the Group and Trans Nafta.
Since the initial payment to Trans Nafta, this item has been subject to an ongoing legal process. The background is as follows:
In October 2008, the Group reached a legal settlement with Trans Nafta relating to the original purchase by the Group of GNS.  –
As part of that settlement the Group and Trans Nafta entered into a sale and purchase agreement (“SPA”) relating to the GPU 
and the Group made an advance payment to Trans Nafta in accordance with the SPA. 
During 2009 and 2010, negotiations continued between the Group and Trans Nafta on the purchase and joint operation of the  –
GPU. However, it became clear that the resolution of the key legal, operational and commercial matters was unlikely to be 
achieved within a reasonable timeframe. 
On 2 May 2010, legal proceedings commenced by the Group’s wholly-owned subsidiary GNS, against OOO Gazneftedobycha  –
(“GND”), a subsidiary of Trans Nafta, for the recovery from GND of the security deposit plus interest accrued since November 
2008.
On 24 August 2010, the Moscow Arbitration Court ordered GND to pay RUR 640 million (approximately US$22 million) to Volga  –
Gas, representing the original prepayment plus an uplift for interest. This judgement was then revised in the Court of Appellation 
on 22 November 2010. 
A subsequent hearing in the Court of Cassation on 28 February 2011 fully upheld the original judgement given in August 2010. –
Having a final judgement on the legal status of the security deposit, the Group is currently negotiating a final settlement with  
Trans Nafta which is expected to include, inter alia, purchase of the Group’s share in the GPU. The interest element of the August 
judgement (RUR 40 million) has not yet been accrued by the Group as it is deemed to be a contingent asset as at 31 December 2010.
13. Term deposits, cash and cash equivalents – Group
At 31 December
2010
US$ 000
2009
US$ 000
Cash at bank and on hand 21,514 14,171 
Short-term bank deposits 5,085 18,472 
Total cash and cash equivalents 26,599 32,643 
Term bank deposit – 1,000 
In November 2009, the Company placed US$1.0 million on a six month term deposit with EBS Building Society in the Republic of 
Ireland. This was repaid in full on maturity.
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 39
Business Overview Corporate Governance Financial Statements
An analysis of Group deposits, cash and cash equivalents by bank and currency is presented in the table below:
At 31 December
Bank Currency
2010
US$ 000
2009
US$ 000
Cyprus 
Bank of Cyprus RUR –  – 
United Kingdom 
The Royal Bank of Scotland USD  18,417  12,160 
The Royal Bank of Scotland GBP 491  392 
Russian Federation 
Unicreditbank RUR 261  3,697 
Other banks and cash on hand RUR 5,747  339 
Unicreditbank USD  1,683  16,055 
Total cash at bank and short-term deposits 26,599  32,643 
Republic of Ireland
EBS Building Society USD  –  1,000 
Total term deposit –  1,000 
14. Inventories – Group
At 31 December
2010
US$ 000
2009
US$ 000
Production & other spares 1,540  3,533 
Crude oil inventory 90  81 
Total inventories 1,630  3,614 
15. Other receivables – Group
At 31 December
2010
US$ 000
2009
US$ 000
VAT receivable 336 1,355 
Prepayments 1,668 1,338 
Other accounts receivable 121 259 
Total other receivables 2,125 2,952 
Prepayments to contractors relate to initial advances made in respect of drilling, construction and other projects.
16. Share capital and share premium – Group 
The following table summarises the movement in the share capital and share premium of the Company for the years ended 2009 
and 2010. 
 Number 
of shares
Share capital
US$ 000
Share premium
US$ 000
At 1 January 2009 54,017,800  1,045  139,681
Issue of shares:
– public placement 27,000,000  440  26,560 
– share issue costs – – (368)
At 31 December 2009 81,017,800  1,485  165,873 
At 1 January 2010 81,017,800  1,485  165,873 
Issues of shares –  –  – 
At 31 December 2010 81,017,800  1,485  165,873 
The total number of authorised Ordinary Shares is 330,720,100 (2009: 330,720,100) with a par value of £0.01 per share  
(2009: £0.01 per share). Volga Gas plc
40_Annual Report and Accounts 2010
16. Share capital and share premium – Group continued
Share based compensation
Share options and other share based awards have been granted to certain directors. There were no shares issued to directors 
under such schemes during 2010.
2008 Executive Share Option Plan 
On 15 July 2008 the Group announced a new Executive Share Option Plan (“ESOP”). During 2008, the Company granted options to 
acquire 1,137,464 Ordinary Shares to Mikhail Ivanov under the terms of the ESOP. The options may be exercised at a price of 405p 
per share and vest in equal portions on May 2010, 2011 and 2012 and will remain outstanding until May 2017. In January 2009, the 
Company granted 568,732 thousand share options to Tony Alves under the ESOP. The options vest in eight semi-annual tranches 
over a period of four years providing certain performance conditions related to the Company’s share price are met. The options 
have an exercise price of £1.00. Under the terms of the plan, during 2010 options over 450,247 shares (2009: 71,092 shares) were 
eligible for vesting. Share grant expenses of US$123,000 (2009: US$72,000) have been made.
The fair value of share options granted and of restricted shares issued is measured by use of the Black-Scholes pricing model with 
the following assumptions:
Year ended 31 December
2009 Executive Share
Option Plan
Share price 76.5p
Exercise price 100.0p–200.0p
Expected volatility 107.7%
Expected life 0–4 years
Risk free rate 3.0%
Expected dividends None
17. Other reserves – Group
At 31 December 
2010
US$ 000
2009
US$ 000
Currency translation adjustment (19,070) (18,063)
Share grant expense 5,196 5,073
Total other reserves (13,874) (12,990)
Currency translation adjustments represent adjustments on translation of the share capital of non-US$ subsidiaries into US$.  
All related exchange gains and losses are charged directly to equity.
18. Trade and other payables – Group
At 31 December 
2010
US$ 000
2009
US$ 000
Trade payables 860 2,688 
Taxes other than profit tax 1,074 316
Customer advances 496 158 
Total 2,430 3,162
The maturity period of the Group’s financial liabilities, comprising only trade and other payables at 31 December 2010 and 2009  
is as follows:
Maturity period at 31 December 2010 0 to 3 months 3 to 12 months Over 1 year Total
Trade payables 620 240 – 860
Maturity period at 31 December 2009 0 to 3 months 3 to 12 months Over 1 year Total
Trade payables 1,945 549 194 2,688
Notes to the IFRS Consolidated Financial Statements 
continued  
Annual Report and Accounts 2010_ 41
Business Overview Corporate Governance Financial Statements
19. Investments – Company
Investments in subsidiaries are accounted for at cost. The Company’s subsidiaries are as follows:
Name Jurisdiction Nature of Operations % Owned From
Woodhurst Holdings Ltd. Cyprus Intermediate Holding Company 100% October 2005
Pre-Caspian Gas Company Russia Oil & gas exploration and development 100% May 2006
Gaznefteservice Russia Oil & gas exploration and development 100% September 2006
Shropak Investments Ltd Cyprus Dormant 100% June 2007
Volga Gas (Cyprus) Ltd. Cyprus Intermediate Holding Company 100% August 2007
Gazservice Russia Special purpose entity 99% October 2008
ZAO Gamma Russia Joint operating company 75% January 2009
Volga Gas Finance Ltd. UK Intermediate Holding Company 100% March 2010
To avoid certain legal restrictions on land ownership in October 2008 Pre-Caspian Gas Company acquired a 99% shareholding  
in ZAO Gazservice. Subsequently, Pre-Caspian Gas Company sold an unimproved plot of land to ZAO Gazservice at cost basis.
Company
31 December
2009
US$ 000
Additions
US$ 000
Disposals
US$ 000
31 December
2010
US$ 000
Investments in Woodhurst Holdings 143,683 6,000 – 149,683
Investments in Volga Gas (Cyprus) 1,051 300 – 1,351
Total investments 144,734 6,300 – 151,034
The Company funds its activities in the Russian Federation via Woodhurst Holdings, the Company’s Cyprus registered subsidiary. 
20. Accumulated (loss)/profit – Company
At 31 December
2010
US$ 000
2009
US$ 000
Retained losses (682) (1,006)
(Loss)/profit for the year (1,158) 324 
Accumulated loss (1,840) (682)
21. Audit fees – Group and Company
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditors  
and associates:
Year ended 31 December
2010
US$ 000
2008
US$ 000
Fees payable to Company’s auditor for the audit of parent company and consolidated  
financial statements 242 235 
Fees payable to the Company’s auditor and its associated firms for other services:
– The audit of company’s subsidiaries pursuant to legislation 39 20 
– Other services pursuant to legislation 120 50
– Tax services 22 201
– Other, training – –
Total 423 506 Volga Gas plc
42_Annual Report and Accounts 2010
22. Related party transactions – Group and Company
The Group is controlled by Baring Vostok Private Equity Funds III and IV, which respectively own 48.9% and 9.76% (in aggregate 
58.66%) of the Company’s shares. The Baring Vostok Private Equity Funds exercise their control through a number of nominee 
holding companies. The remaining 41.34% of the shares are widely held.
The following transactions concerning purchases of goods and services were carried out with related parties:
Related party Relationship Nature of transactions
Year ended 31 December
2010
US$ 000
2009
US$ 000
Baring Vostok Cyprus Limited Affiliated with controlling shareholder Rent, services 127 133
Vladimir Koshcheev Director Services – 13
(a) Other related parties
The following transactions were carried out with companies nominally held by the Group’s employees but not controlled by the Group.
Related party Nature of transactions
Year ended 31 December
2010
US$ 000
2009
US$ 000
OOO Geo Eko Long-term loan (interest rate 1%) 36 24 
OOO Geopotential Long-term loan (interest rate 1%) 33 23 
(b) Year-end balances arising from transactions with related parties 
31 December 
2010
US$ 000
31 December
 2009
US$ 000
Due to related parties
Baring Vostok (Cyprus) Limited 13 12
All transactions with related parties were made on commercial basis.
(b) Key management
Key management is considered to be the Company’s executive directors. Information on key management compensation is 
presented in the Directors’ Remuneration Report.
23. Contingencies and Commitments 
23.1 Capital commitments
(i) Pre-Caspian Licence Area
In accordance with the license agreement for the Pre-Caspian license area, PGK was required to acquire an additional 500 km of 
2D seismic in 2009. At the end of the reporting period PGK had completed its seismic commitments on the Pre-Caspian licence 
area. In order to maintain its licence interest, PGK will be required to commence drilling a well before 31 December 2011. This 
expenditure is not at present committed.
(ii) Urozhainoye-2 Licence Area
PGK was required to commence drilling a well in the Urozhainoye-2 Licence Area during 2010. As a result of operational delays, this 
was deferred to early 2011. Management estimates the cost of such a well to be US$3.5 million.
As of the balance sheet date all other licence commitments have been met.
Notes to the IFRS Consolidated Financial Statements 
continued Annual Report and Accounts 2010_ 43
Business Overview Corporate Governance Financial Statements
23.2 Taxation 
Russian tax, currency and customs legislation is subject to varying interpretations and changes which can occur frequently. 
Management’s interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the 
relevant regional and federal authorities. Recent events within the Russian Federation suggest that the tax authorities may be taking 
a more assertive position in their interpretation of the legislation and assessments, and it is possible that transactions and activities 
that have not been challenged in the past may be challenged. As a result, significant additional taxes, penalties and interest may be 
assessed. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year of 
review, but under certain circumstances, reviews may cover longer periods.
At 31 December 2010, management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax, 
currency and customs positions will be sustained.
23.3 Restoration, rehabilitation, and environmental costs
The Group operates in the upstream oil industry in the Russian Federation and its activities may have an impact on the environment. 
The enforcement of environmental regulations in the Russian Federation is evolving and the enforcement posture of government 
authorities is continually being reconsidered. The Group periodically evaluates its obligation related thereto. The outcome of 
environmental liabilities under proposed or future legislation, or as a result of stricter interpretation and enforcement of existing 
legislation, cannot reasonably be estimated at present, but could be material.
Under the current levels of enforcement of existing legislation, management believes there are no significant liabilities in addition  
to amounts which are already accrued and which would have a material adverse effect on the financial position of the Group.
23.4 Oilfield licences
The Group is subject to periodic reviews of its activities by governmental authorities with respect to the requirements of its oilfield 
licences. Management of the Group correspond with governmental authorities to agree on remedial actions, if necessary, to resolve 
any findings resulting from these reviews. Failure to comply with the terms of a licence could result in fines, penalties, licence limitation, 
suspension or revocation. The Group’s management believes any issues of non-compliance will be resolved through negotiations 
or corrective actions without any materially adverse effect on the financial position or the operating results of the Group.
In January 2008 the Group was issued with an amendment to its Karpenskiy Licence Agreement. The amendments to the KLA 
remove the historical licence breaches.
The principal licences of the Group and their expiry dates are:
Field Licence Holder Licence expiry date
Karpenskiy OOO Pre-Caspian Gas Company 2021
Pre-Caspian OOO Pre-Caspian Gas Company 2031
Urozhainoye-2 OOO Pre-Caspian Gas Company 2032
Vostochny-Makarovskoye OOO Gaznefteservice 2026
Management believes that in practice the relevant authorities rarely suspend or restrict the licences, especially at the exploration 
stage, and tend to terminate licences only in the event of continuous non-compliance and the failure of the licence holder to remedy 
breaches. The Group has not received any official warnings or notifications about continuous non-compliance or any risk of 
suspension, restriction or termination.
24. Post-balance sheet events
Trans Nafta case: In February 2011 the Moscow Court of cassation upheld the initial verdict in the case with Trans Nafta ordering Trans 
Nafta to pay RUR 640 million (approximately US$22 million) representing the advance previously made to Trans Nafta in respect of the 
acquisition of a 75% interest in a gas processing unit.
  Volga Gas plc
44_Annual Report and Accounts 2010
Notice of Meeting 
Notice is hereby given that the annual general meeting (the 
“AGM”) of Volga Gas plc (the “Company”) will be held at the 
London office of Akin Gump Strauss Hauer & Feld at Ten Bishops 
Square, London E1 6EG on 13 June 2011 at 10.00 a.m. for the 
following purposes:
Ordinary Business
To receive and adopt the Company’s accounts for the year 1. 
ended 31 December 2010 and the directors’ report.
To reappoint Aleksey Kalinin, who retires by rotation,  2. 
as a director.
To reappoint Vladimir Koshcheev, who retires by rotation,  3. 
as a director.
To reappoint Ronald Freeman, who retires by rotation,  4. 
as a director.
To reappoint PricewaterhouseCoopers LLP as auditors of  5. 
the Company until the conclusion of the next general meeting 
at which accounts are laid before the Company.
To authorise the directors to determine the remuneration  6. 
of the auditors of the Company.
Special Business
To consider and, if thought fit, to pass resolution 7 as an 
ordinary resolution and resolution 8 as a special resolution.
That the directors be and they are hereby generally and 7. 
unconditionally empowered to exercise all the powers of the 
Company to allot shares in the Company and/or to grant 
rights to subscribe for or to convert any security for shares in 
the Company (together “Relevant Securities”) up to a maximum 
aggregate nominal amount of £1,000,000 to such persons and 
at such times and on such terms as they think proper, provided 
that this authority shall expire the earlier of (i) fifteen months 
from the passing of this resolution, or (ii) the conclusion of  
the AGM of the Company to be held in 2012 (unless renewed, 
varied or revoked by the Company prior to or on such date), 
save that this authority shall allow the Company to make offers 
or agreements before the expiry of such authority which would 
or might require Relevant Securities to be allotted after such 
expiry and the directors shall be entitled to allot Relevant 
Securities pursuant to any such offer or agreement as if this 
authority had not expired; and all unexercised authorities 
previously granted to the directors to allot Relevant Securities 
be and are hereby revoked.
That the directors be and they are hereby empowered pursuant 8. 
to Sections 570 and 573 of the Companies Act 2006 (the “Act”) 
to allot equity securities (as defined in Section 560 of the Act) 
for cash; pursuant to the authority conferred by resolution 7 
set out in this Notice convening the AGM (the “Notice”) as if 
Section 561 of that Act did not apply to any such allotment, 
provided that this power shall be limited to:
the allotment of equity securities in connection with a (a) 
rights issue, open offer or other offer of securities in 
favour of the holders of ordinary shares on the register  
of members at such record date(s) as the directors may 
determine where the equity securities respectively 
attributable to the interests of the ordinary shareholders 
are proportionate (as nearly as may be) to the respective 
numbers of ordinary shares held by them on any such 
record date(s), subject to such exclusions or other 
arrangements as the directors may deem necessary or 
expedient to deal with fractional entitlements or legal or 
practical problems arising under the laws of any overseas 
territory or the requirements of any regulatory body or 
stock exchange or by virtue of shares being represented 
by depositary receipts or any other matter; and 
the allotment (otherwise than pursuant to sub-paragraph (b) 
(a) above) to any person or persons of equity securities  
up to an aggregate nominal amount of £150,000.
  And the power conferred hereby shall expire upon the expiry 
of the general authority conferred by resolution 7 set out in 
this Notice (unless renewed, varied or revoked by the Company 
prior to or on such date), save that the Company shall be 
entitled to make offers or agreements before the expiry of 
such power which would or might require equity securities  
to be allotted after such expiry and the directors shall be 
entitled to allot equity securities pursuant to any such offer or 
agreement as if the power conferred hereby had not expired. 
Registered Office: BY ORDER OF THE BOARD
Ground Floor Antonio Maria Alves
17-19 Rochester Row Company Secretary
London 14 April 2011
SW1P 1QT Annual Report and Accounts 2010_ 45
Notes:
Resolutions 1–7 are ordinary resolutions. For these resolutions 1. 
to be passed, a simple majority of the votes cast at the 
Company’s AGM must be in favour of the resolutions. 
Resolution 8 is a special resolution. For this resolution to  
be passed, at least three-quarters of the votes cast at the 
AGM must be in favour of the resolution.
A member entitled to attend, speak and vote at the meeting 2. 
convened by the notice set out above is entitled to appoint  
a proxy to attend, speak and, on a poll, to vote in his place. 
To appoint more than one proxy you may photocopy this form. 
Please indicate the proxy holder’s name and the number of 
shares in relation to which they are authorised to act as your 
proxy (which, in aggregate, should not exceed the number of 
shares held by you). Please also indicate if the proxy instruction 
is one of multiple instructions being given. All forms must be 
signed and should be returned together in the same envelope.
A form of proxy is enclosed. To be effective, it must be 3. 
deposited at the office of the Company’s registrars (Capita 
Registrars) so as to be received not later than 48 hours before 
the time appointed for holding the AGM. Completion of the 
proxy does not preclude a member from subsequently 
attending and voting at the meeting in person if he or she  
so wishes.
To change your proxy instructions simply submit a new proxy 4. 
appointment using the methods set out in Notes 2 and 3 
above. Note that the cut-off time (in Note 3 above) for receipt 
of proxy appointments also apply in relation to amended 
instructions; any amended proxy appointment received after 
the relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy 
form and would like to change the instructions using another 
hard-copy proxy form, please contact the Company’s registrars. 
If you submit more than one valid proxy appointment, the 
appointment received last before the latest time for the receipt 
of proxies will take precedence.
In order to revoke a proxy instruction you will need to inform 5. 
the Company using one of the following methods:
by sending a signed hard copy notice clearly stating  (a) 
your intention to revoke your proxy appointment to the 
Company’s registered office address. In the case of a 
member which is a company, the revocation notice must 
be executed under its common seal or signed on its 
behalf by an officer of the company or an attorney for the 
company. Any power of attorney or any other authority 
under which the revocation notice is signed (or duly a 
certificated copy of such power of authority) must be 
included with the revocation notice; or 
by sending an email to info@volgagas.com (b) 
In either case, the revocation notice must be received by the 
Company’s registrars no later than the cut-off time set out in 
Note 3 above.
The register of interests of the directors and their families  6. 
in the share capital of the Company and copies of contracts 
of service of directors with the Company or with any of its 
subsidiary undertakings will be available for inspection at  
the registered office of the Company during normal business 
hours (Saturdays and public holidays excepted) from the  
date of this notice until the conclusion of the AGM.
To appoint a proxy or to give or amend an instruction to a 7. 
previously appointed proxy via the CREST system, the 
CREST message must be received by the issuer’s agent 
RO33 no later than forty eight hours before the meeting date. 
For this purpose, the time of receipt will be taken to be the 
time (as determined by the timestamp applied to the message 
by the CREST Applications Host) from which the issuer’s 
agent is able to retrieve the message. After this time any 
change of instructions to a proxy appointed through CREST 
should be communicated to the proxy by other means. 
CREST Personal Members or other CREST sponsored 
members, and those CREST Members who have appointed 
voting service provider(s) should contact their CREST sponsor 
or voting service provider(s) for assistance with appointing 
proxies via CREST. For further information on CREST 
procedures, limitations and system timings please refer to the 
CREST Manual. We may treat as invalid a proxy appointment 
sent by CREST in the circumstances set out in Regulation 
35(5) (a) of the Uncertificated Securities Regulations 2001.  
In any case your proxy form must be received by the 
Company’s registrars no later than forty eight hours  
before the meeting date.
Only those members entered on the register of members of 8. 
the Company at 6.00 p.m. on 11 June 2011 or, in the event 
that this meeting is adjourned, in the register of members as 
at 6.00 p.m. on the day two days before the date of any 
adjourned meeting, shall be entitled to attend and vote at the 
meeting in respect of the number of ordinary shares registered 
in their names at that time. Changes to the entries on the 
register of members after 6.00 p.m. on 11 June 2011 or, in the 
event that this meeting is adjourned, in the register of members 
after 6.00 p.m. on the day two days before the date of the 
adjourned meeting, shall be disregarded in determining the 
rights of any person to attend or vote at the meeting.
Any corporation which is a member can appoint one or more 9. 
corporate representatives who may exercise on its behalf all 
of its powers as a member provided they do not do so in 
relation to the same shares.
  Volga Gas plc
46_Annual Report and Accounts 2010
Glossary of Technical Terms 
2-D seismic geophysical data that depicts the subsurface strata in two dimensions
3-D seismic geophysical data that depict the subsurface strata in three dimensions. 3-D seismic typically 
provides a more detailed and accurate interpretation of the subsurface strata than 2-D seismic
abandonment application of a cement plug to close a well and welding of a steel plate to the top of the well; the 
well is then plugged and abandoned
bbl the standard barrel of crude oil or other petroleum product is 42 US gallons (approximately 159 litres)
bcf billion cubic feet
bcm billion cubic metres
Best estimate the term ‘best estimate’ is used here as a generic expression for the estimate considered to be the 
closest to the quantity that will actually be recovered from the accumulation between the date of 
the estimate and the time of abandonment
boe barrels of oil equivalent, being for natural gas the energy equivalent on one barrel of oil. The usual 
ratio is to equate 6,000 cubic feet to one barrel of oil equivalent
condensate liquid hydrocarbons associated with the production from a primarily natural gas reservoir
field means an area consisting of either a single reservoir or multiple reservoirs, all grouped on or related 
to the same individual geological structural feature and/or stratigraphic condition
gas natural gas
gas processing facilities together with the laboratory, gathering pipelines and storage facilities (if any), a plant comprising 
one or more units such that after conditioning the gas will be of pipeline quality as, specified by 
Gazprom, such units may include dehydration, sweetening and separation of natural gas liquids
gas-water contact bounding surface in a reservoir above which predominantly gas occurs and below which 
predominantly water occurs
hydrocarbons compounds formed from the elements hydrogen (H) and carbon (C) and existing in solid, liquid or 
gaseous forms
Kungurian Salt a layer of salt laid down during the lower Permian age which occurs in the Northern Caspian 
Petroleum Province
licence area the particular subsoil plot specified in the subsoil licence issued by the applicable Russian federal 
authority, which the licence holder has the right to use for the purpose and on the terms specified in 
the subsoil licence. A licence area may contain one or more fields or may encompass only a portion 
of a field
liquidation Abandonment
mmbbls million barrels
mcm thousand cubic metres
mmboe million barrels of oil equivalent
natural gas hydrocarbons that are gaseous at one atmosphere of pressure at 20°C. It can be divided into lean 
gas, primarily methane but often containing some ethane and smaller quantities of heavier 
hydrocarbons (also called sales gas) and wet gas, primarily ethane, propane and butane as well as 
smaller amounts of heavier hydrocarbons; partially liquid under atmospheric pressure Annual Report and Accounts 2010_ 47
 
petroleum naturally occurring liquids and gasses which are predominantly comprised of hydrocarbon compounds
possible reserves  are those unproven reserves that, on the available evidence and taking into account technical and 
economic factors, have a 10.0 per cent. chance of being produced
probable reserves  are those reserves in which hydrocarbons have been located within the geological structure with  
a lesser degree of certainty because fewer wells have been drilled and/or certain operational tests 
have not been conducted. Probable reserves are those reserves that, on the available evidence and 
taking into account technical and economic factors, have a better than 50.0 per cent. chance of 
being produced
prospective resources Are those quantities of hydrocarbons which are estimated, on a given date, to be potentially 
recoverable from undiscovered accumulations
proved reserves  include reserves that are confirmed with a high degree of certainty through an analysis of 
development history and/or volume method analysis of the relevant geological and engineering 
data. Proved reserves are those that, based on the available evidence and taking into account 
technical and economic factors, have a better than 90.0 per cent. chance of being produced
proved plus sum of the proved reserves and the probable reserves calculated in accordance with SPE standards
probable reserves 
reserves quantities of petroleum which are anticipated to be commercially recoverable from known  
accumulations from a given date forward
reservoir a porous and permeable underground formation containing a natural accumulation of producible 
natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from 
other reservoirs
risk factor for contingent resources means the estimated chance, or probability, that the volumes will be 
commercially extracted; for prospective resources means the chance or probability of discovering 
hydrocarbons in sufficient quantity for them to be tested to the surface, this, then, is the chance or 
probability of the prospective resource maturing into a contingent resource
SPE standards reserves definitions consistent with those approved in March 1997 by the Society of Petroleum 
Engineers and the World Petroleum Congresses
sub-salt below the Kungurian salt layer
supra-salt above the Kungurian salt layer Volga Gas plc
48_Annual Report and Accounts 2010
The Russian reserves system is based solely on the analysis  
of geological attributes. Explored reserves are represented by 
categories A, B, and C1; preliminary estimated reserves are 
represented by category C2; and potential resources are 
represented by category C3.
Category A reserves are calculated on the part of a deposit drilled 
in accordance with an approved development project for the oil 
or natural gas field. They represent reserves that have been 
analysed in sufficient detail to define comprehensively the type, 
shape and size of the deposit; the level of hydrocarbon saturation; 
the reservoir type; the nature of changes in the reservoir 
characteristics; the hydrocarbon saturation of the productive 
strata of the deposit; the content and characteristics of the 
hydrocarbons; and the major features of the deposit that 
determine the conditions of its development.
Category B represents the reserves of a deposit (or portion 
thereof), the oil or natural gas content of which has been 
determined on the basis of commercial flows of oil or natural 
gas obtained in wells at various hypsometric depths. Category 
B reserves are computed for a deposit (or a portion thereof) that 
has been drilled in accordance with either a trial development 
project or an approved development scheme.
Category C1 represents the reserves of a deposit (or of a 
portion thereof) whose oil or natural gas content has been 
determined on the basis of commercial flows of oil or natural 
gas obtained in wells and positive results of geological and 
geophysical exploration of non-tested wells. Category C1 
reserves are computed on the basis of results of geological 
exploration work and production drilling and must have been 
studied in sufficient detail to yield data from which to draw up 
either a trial development project or a development scheme.
Category C2 reserves are preliminary estimated reserves of a 
deposit calculated on the basis of geological and geophysical 
research of unexplored sections of deposits adjoining sections 
of a field containing reserves of higher categories and of untested 
deposits of explored fields. Category C2 reserves are used to 
determine the development potential of a field and to plan 
geological, exploration and production activities.
Category C3 resources are prospective reserves prepared  
for the drilling of (i) traps within the oil-and-gas bearing area, 
delineated by geological and geophysical exploration methods 
tested for such area and (ii) the formation of explored fields 
which have not yet been exposed by drilling. The form, size and 
stratification conditions of the assumed deposit are estimated 
from the results of geological and geophysical research. The 
thickness, reservoir characteristics of the formations, the 
composition and the characteristics of hydrocarbons are 
assumed to be analogous to those for explored fields. Category 
C3 resources are used in the planning of prospecting and 
exploration work in areas known to contain other reserve 
bearing fields.
In accordance with the Law on Subsoil mineral reserves in Russia 
are subject to mandatory state examination, a precondition of 
the granting of a production license. The state examination of 
reserves is conducted by subsidiary organisations of the 
Federal Agency on Subsoil Use, including the State Reserve 
Commission, Central Reserve Commission and its regional 
departments. Once a subsoil user is granted an exploration, 
development or production license, it is required to file annual 
reports reflecting changes in reserves. Subsoil users’ reserve 
reports are submitted annually for examination and approval by 
the Central Reserve Commission or, if there has been a substantial 
change in reserves, by the State Reserve Commission.
Russian Classification of Reserves  Registered Office
Ground Floor, 17-19 Rochester Row
London SW1P 1QT
United Kingdom
Company Secretary
Tony Alves
of the registered office
Nominated Adviser and Joint Broker
Oriel Securities Ltd
125 Wood Street
London EC2V 7AN
United Kingdom
Auditors 
PricewaterhouseCoopers LLP,  
Chartered Accountants and Statutory Auditors
32 Albyn Place, Aberdeen AB10 1YL
United Kingdom
Lawyers and Solicitors to the Company as to  
English and Russian Law
As to English law:
Akin Gump Strauss Hauer & Feld
8th Floor, Ten Bishops Square
London E1 6EG
United Kingdom
As to Russian law:
Akin Gump Strauss Hauer & Feld LLP
Ducat Place II, 7 Gasheka Street
123056 Moscow
Russia
Registrar
Capita Registrars
The Registry
34 Beckenham Road, Beckenham
Kent BR3 4TU
United Kingdom
Corporate Communications/PR
Financial Dynamics
26 Southampton Buildings
London WC2A 1PB
United Kingdom
Joint Broker
Renaissance Securities (Cyprus) Limited
4 Archbishop Makarios III Avenue
Capital Center, 9th Floor
Nicosia 1505
Cyprus
volgagas.com
Corporate Directory  Volga Gas plc
Ground Floor
17–19 Rochester Row
London 
SW1P 1QT
www.volgagas.com