Volga Gas plc
Annual Report 
and Accounts 201 2
Volga Gas plc Annual Report and Accounts 201 2 RU SS I A
KARPENSKIY
UROZHAINOYE-2
PRE-CASPIAN
VOSTOCHNY- 
MAKAROVSKOYE
R U
©2010
DOBRINSKOYE
volgagas.com
Volga Gas plc is an 
independent oil and gas 
exploration and production
company focused on the 
Volga Region of Russia. 
It has 1 00% interests in 
five oil and gas exploration 
and production licences 
in the Saratov and 
Volgograd regions
KA Z AKHSTAN VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
1
Contents
Business Overview
1 Review of 2012
2 Volga at a Glance 
4 Chairman’s Statement 
5 Chief Executive’s Report 
6 Operational Review
7 Oil, gas and condensate reserves
8 Financial Review
10 Principal Risks and Uncertainties
Corporate Governance 
12 Board of Directors 
14 Corporate Governance Statement 
16 Report of the Directors 
19 Directors’ Remuneration Report 
Financial Statements
21 Independent Auditors’ Report 
22 Group Income Statement
22 Group Statement of Comprehensive 
Income
23 Group Balance Sheet
24 Group Cash Flow Statement
25 Company Balance Sheet
26 Group Statement of Changes  
in Shareholders’ Equity 
26 Company Statement of Changes in 
Shareholders’ Equity 
27 Notes to the IFRS Consolidated 
Financial Statements 
44 Notice of Meeting 
46 Glossary of Technical Terms
IBC Corporate Directory
 ompleted rst t o phases of o rins oye gas processing 
plant upgrade
 ommenced full time production from the Vostochny 
 a arovs oye gas condensate eld
 Recommenced production from o rins oye eld after 
 ell sidetrac s
 Steady production from the ens oye oil eld 
 Independent assessment of reserves completed giving 
com ined 2 reserves of  million arrels of oil e uivalent 
and V of S 01.2 million
Business Overview
Revie of 201 2 2
Business Overview
Volga at a lance
 ur assets are located in an esta lished oil and
gas province. he area enefits from the 
existing rail road and pipeline infrastructure and 
proximity to Russia s main energy mar ets. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
3
Dobrinskoye gas
processing plant
2012 Progress
 ompleted the first t o phases of the gas 
plant upgrade  upgrade of the sulphur 
extraction capa ility and to the condensate 
separation capacity to ena le processing of 
gas from the Vostochny a arovs oye field. 
2013 Objectives
 omplete third phase of the gas plant 
upgrade and to achieve certification of plant 
processing capacity of up to 1 million cu ic 
metres per day . million cu ic feet 
per day .
Uzenskoye oil field
2012 Progress
 roduction maintained for a fourth year 
averaging 1 0 0 arrels of oil per day 
 opd 2011 1 1 opd . 
2013 Objectives
 aintain enhance production profile 
and maximise extraction of oil from 
existing ells.
Dobrinskoye gas/
condensate field
2012 Progress
 rilled and completed sidetrac s to ells 22 
and 2 on the o rins oye field and 
achieved significant increases in production. 
2013 Objectives
 anage production from the t o existing 
 ells to maximise long term extraction of 
gas and condensate.
Exploration activity
2012 Progress
 ompleted exploration ells in each of the 
 ro hainoye 2 and re aspian licence areas 
in line ith licence commitments ut ithout 
commercial success. 
2013 Objectives
 omplete evaluation of production potential 
of the So olevs oye oil discovery in 
 ro hainoye 2 licence area.
Vostochny 
Makarovskoye gas/ 
condensate field
2012 Progress
 or over of ell 0 to provide an additional 
production ell on the field. ompleted hoo 
up of production ells to the gas processing 
facility and commenced full time production 
of gas and condensate in cto er 2012.
2013 Objectives
 rilling of sidetrac to ell V and of 
a ne ell V to increase production 
capacity and utilise the planned increase 
in gas plant capacity. 4
Business Overview
 hairman s Statement
 S m
Cash balance at  
the end of 2012
Dear Shareholder,
2012 has een a pivotal year for Volga as ith the main focus 
of the ompany on completion of a pro ect to upgrade the 
 o rins oye gas plant to ena le the start of commercial production 
from the roup s largest eld Vostochny a arovs oye. hile this 
 or as under ay there as extended disruption to production 
from the other gas eld o rins oye as a result of hich overall 
production realised in 2012 of 1 arrels of oil e uivalent per 
day oepd as slightly less than in 201 1. evertheless as e 
exit 2012 and start 201 Volga as has three elds in commercial 
production and follo ing the anticipated increase in gas processing 
capacity is poised to increase production signi cantly during 201 .
Improved realisations from our oil production hich has remained 
steady through 2012 partly o set lo er gas production and helped 
the roup maintain its relatively strong cash o . 
 he cash generating capa ility of the elds as also an important 
factor in the roup s a ility to secure its rst commercial de t 
facility hich as dra n do n during the rst half of 2012. his 
facility as utilised to support the roup s short and medium term 
investment strategy and provided extra nancial exi ility as e 
drive production gro th in 2012 and 201 .
 he roup has signi cant proven reserves in its three principal 
 elds hich ere su ect to an independent evaluation during 2012. 
 hese elds form the asis of short term gro th in production. 
 ur elds are advantageously located and our costs are su ciently 
lo for us to achieve good returns at oil and gas prices signi cantly 
lo er than those e currently experience. ost importantly 
these assets provide a strong platform for the roup to gro in the 
future oth through successful exploration and y selective value 
accretive ac uisitions.
Volga as has identi ed material exploration prospects ithin 
existing acreage that can e tested at lo cost. 
 uring 201 the strategic priority of the roup ill e to ena le full 
production from the existing ells in the Vostochny a arovs oye 
 eld and to continue the development drilling on that eld. he 
 oard is also evaluating opportunities to extend the roup s 
activities into ne areas here e have identi ed the potential to 
add signi cant value and incremental production volumes. 
 he oard elieves that Volga as has a strong asset ase and the 
 nancial and operational capa ility to develop and extend these 
assets to provide long term value gro th for our shareholders.
Aleksey Kalinin
 hairman VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
5
Business Overview
 hief xecutive s Report
Volga as reached a ey milestone in 2012 ith rst commercial 
production of gas and condensate ith its largest eld Vostochny 
 a arovs oye V . his follo ed from the successful completion 
of the rst t o phases of the upgrade to the gas processing plant 
located at the o rins oye eld site  m from the V eld. he 
 o rins oye eld and gas plant ere oth ac uired in 201 1 through 
the purchase of a neftedo ycha. Another signi cant event of 2012 
 as the completion of an independent evaluation of our oil gas 
and condensate reserves under S standards. he study  y iller 
and ents td ith an e ective date of 1 August 2012 con rmed 
the total roven and ro a le Reserves of the roup at .0 million 
 arrels of oil e uivalent mm oe and gave a net present value 
 V of S 01.2 million ith a 10% per annum discount rate to 
those reserves. f these reserves the over helming ma ority are 
classi ed as roven.
As detailed in the perational Revie elo the ma ority of the 
 or done on our producing assets ase as focused on the t o gas 
 elds. n V the roup added to the ells drilled in earlier years 
 y recompleting an old exploration ell 0 into a third production 
 ell. n the o rins oye eld oth of the production ells have 
 een sidetrac ed ith the aim of restoring production to earlier 
levels on this eld. he third producing eld u hny ens oye in 
the arpens iy licence area produced steadily for its fourth full year 
of production.
 or much of 2012 our gas and condensate production as limited 
to the output from a single ell on o rins oye and as indeed 
shut in hile the construction on the gas plant upgrade pro ect as 
completed. hus although ith volumes from V the nal uarter 
sa a rise in production to over 2 00 oepd aggregate production 
in 2012 of 1 oepd as slightly lo er than 201 1. onse uently 
the revenue and I A performance of the roup in 2012 re ected 
this lo er production. See the inancial Report on pages  and  
for details.
In 2012 exploration activity as limited to the ful lment of 
exploration licence commitments in the ro hainoye 2 and re aspian licence areas. rilling operations on t o ells one in each 
licence area concluded in 2012 ithout discovering potentially 
commercial hydrocar ons and oth ells have een plugged 
and a andoned.
 ur ey strategic o ective is to complete the last phases of the 
 o rins oye gas plant upgrade ith the intention of increasing 
permitted processing capacity fourfold to 1 million cu ic metres per 
day  million cu ic feet per day and to ring the V eld into full 
scale production. he latter ill re uire further development drilling 
of t o ells hich is planned to ta e place in 201 and 201 .
 hile the immediate strategic o ective is to ring our existing 
assets into pea production e remain active in our search for 
complementary assets to expand our usiness.
Finance
 istorically the roup s investments in exploration and capital 
expenditure have een funded from e uity and cash generated 
from operational activities. o that the roup s assets have 
esta lished a trac record of relia le cash generation the oard 
decided that it is an appropriate time to ring an de t into 
the capital structure of the roup. n 2 arch 2012 the roup 
arranged its rst de t facility ith A Rai eisen an for a sum 
of S 10 million.
Current trading
In anuary and e ruary 201 production from the o rins oye 
V and ens oye elds averaged 2 oepd. aving produced 
 ater free oil for four years e are eginning to see some ater cut 
in ens oye as a result of hich e plan to install ater separation 
facilities at the eld shortly a modest investment of less than 
 S 1.0 million. ith oil and condensate prices remaining rm and an 
11. % increase in our gas sales price since the start of the year to an 
e uivalent of S 2. 2 per mcf Volga as continues to experience 
positive net operating cash o .
Outlook
 ey activities for 201 ill e the ongoing management and 
development of existing production across the portfolio. he 
 roup s priority is to achieve the targeted fourfold increase in the 
 o rins oye gas plant capacity and to extend the ell production 
to utilise this capacity to the maximum extent. It is our current 
expectation that or s on the nal stage of the upgrade ill e 
completed during  201 from hen su ect to o taining the 
necessary permits it ould e possi le to operate the plant at the 
higher capacity.
 ith three ells on the V eld and t o recently or ed over ells 
on the o rins oye eld the ellhead capacity is higher than the 
currently permitted plant throughput. evertheless during 201 
and 201 e intend to ring further ells into production on V 
 y sidetrac ing the previously drilled ell V and y drilling ne 
 ells V and V .
 e are managing the oil production on the u hny ens oye eld 
pending installation of ater separation e uipment ut expect 
overall output from the eld to remain steady at approximately 
1 000 opd. ean hile in the ro hainoye 2 licence area a 
successful or over recently carried out on the So olevs aya 11 
 ell hich as originally drilled y a former licensee ill provide a 
ne stream of oil production after e install production facilities at 
the ell site.
 e loo for ard to delivering a successful ne stream of production 
 hile also pursuing the other gro th opportunities that e see for 
the usiness.
Mikhail Ivanov
 hief xecutive cer 6
Business Overview
 perational Revie Operations overview
 he ey event for the roup in 2012 as the completion of the rst 
t o stages of the upgrade to the o rins oye gas processing plant 
 hich ena led the start up of commercial production from the 
Vostochny a arovs oye gas eld. his represents a turning point 
for the roup s production activities ith all three of the elds no 
in production.
 he overall level of production in 2012 at 1 oepd as elo 
the 2 11 oepd achieved in 201 1. he cause for the lo er output 
 as the o rins oye gas condensate eld eing su ect to 
extended periods of shut do n pending drilling of sidetrac s to 
the t o production ells  oth completed during 2012  and for 
the installation of the process plant upgrades at the o rins oye 
gas plant. onse uently revenues and I A levels in 2012 ere 
 oth lo er than those of 201 1. ull details are discussed in the 
 inancial Revie .
 uring 2012 t o exploration ells ere completed in ful lment of 
outstanding licence o ligations. either of these as commercially 
successful and the costs related to these ells ere expensed.
Gas processing plant upgrade
 he roup gained o nership of the producing o rins oye gas condensate eld and the gas processing plant via the ac uisition 
of a neftedo ycha in April 201 1. nership of the processing 
infrastructure and access to the a prom trun line ena led the V 
 eld to commence commercial production.
 ollo ing a successful test of the chemical process to e used 
for sulphur extraction the plan for the gas plant upgrade as 
approved at the end of 201 1. he rst stage of the upgrade aimed 
at increasing processing capacity and enhancing 2S extraction as 
completed in Septem er 2012 and gas from the V eld started 
 o ing through the plant from the eginning of cto er 2012.
 he uild up of production from V has een gradual as a series 
of tests have een carried out to optimise the process o . he 
plant normally operates at its current permitted capacity of 2 0 000 
cu ic metres per day approximately  million cu ic feet per day 
 mmcf d . 
 he nal stages of the plant upgrade currently under ay are 
intended to raise the processing capacity of the plant to 1 million 
cu ic metres per day  mmcf d . he ey construction elements 
are upgrades to the condensate processing and storage facilities 
and an upgrade to the safety aring system in the plant. ollo ing 
completion of these the plant can e certi ed y the regulatory 
authorities to operate at full capacity. he e uipment re uired for 
the processing and storage upgrade has een delivered to the plant 
site and construction and installation is close to completion. or the 
 aring system the ma or long lead items have een delivered. he 
physical completion of the or is anticipated during the rst half of 
201 after hich regulatory approval of the increased throughput 
 ill e sought.
 he roup has spent approximately S .0 million to date on the 
upgrade pro ect.
Vostochny Makarovskoye gas condensate eld
 he V eld is the roup s largest in terms of its reserves 
representing some % of the roup total roven and ro a le 
reserves. Although the initial production ells ere drilled in 200 
and 200 full time production as held up pending the resolution 
of various legal and commercial matters relating to gas processing. 
 hese issues ere nally resolved in April 201 1 hen the roup 
ac uired the o rins oye gas eld and processing facility and as 
mentioned a ove full time production commenced in cto er 2012 
on completion of the rst t o phases of the gas plant upgrade.
In addition to the existing production ells a previously suspended 
exploration ell 0 drilled and tested y a previous licensee 
in the o ri ovs iy sandstone formation as or ed over and 
recompleted in April 2012. After the recompletion under a series 
of production tests the ell o ed at a rate of 1 1 0 cu ic 
metres per day approximately . mmcf d through a 10 mm cho e. 
 anagement estimates that hen placed on permanent operation 
the production rates for the ell ill exceed 100 000 cu ic metres 
per day . mmcf d ith condensate of approximately 20 cu ic 
metres 12 arrels per day.
 uring the early months of 2012 the roup continued ith its 
extended pilot production programme on the V 1 and V 2 
 ells. he ells ere individually o ed through a test separator 
installed at the eld site. ondensate as gathered in storage tan s 
on location for sale hile gas produced from the ells as ared. 
Although this activity as primarily a technical test programme it 
provided a small pro t contri ution.
 he data gathered from the test programme has ena led the roup 
to develop a production plan for the V eld. Initial production from 
the eld ill e managed to ena le higher recovery of condensate 
from the reservoir in the early years hile in the later years an 
increasing proportion of gas is planned to e produced from the 
 ells. In 201 the development plan for the V eld includes a 
sidetrac of the existing ell V  hich as drilled early in 200 
and up to t o ne production ells V and V .
Dobrinskoye eld
 he o rins oye gas condensate eld as ac uired y the roup 
in April 201 1 and produced steadily for some months after the 
purchase. uring uly and August 201 1 the eld as shut in hile 
repairs ere underta en on the t o ells in the o rins oye eld. It 
 as decided during this operation that a sidetrac to ell 22 ould 
 e necessary to ena le optimum production from that ell.
 he sidetrac on ell 22 as completed in August 2012. hile the 
sidetrac ell 22 tested at commercial rates some ater ingress 
 as o served in the ell suggesting that the production that might 
 e achieved ould need to e managed carefully. he decision as 
ta en at that time to drill a sidetrac to ell 2 ith the aim of 
improving eld productivity.
 y ovem er 2012 the sidetrac to ell 2 had een successfully 
drilled and tested. he ell 2 sidetrac encountered the upper 
section of the producing vlans o ivens iy car onate reservoir as 
expected at a total vertical depth of 2 2 metres  metres higher 
than at the original vertical hole. he ell as completed ith 
a 1 metre deviated open hole section  metres vertical in the 
producing interval.
 he ell as tested ith a 10 mm cho e and produced at a sta ilised 
rate of 1 00 cu ic metres . million cu ic feet of gas per day 
and 2. cu ic metres  arrels per day of condensate a total 
of approximately 1 1 oepd . he condensate ratio is 0 cm
 m
 
 2. arrels per million cu ic feet . VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
7
Volga as plans to operate ell 2 ith an  mm cho e and expects 
production of approximately . mmcf d of gas and 2 0 pd of 
condensate close to 00 oepd in total ith some additional 
production from ell 22.
 uring 1 2012 the o rins oye eld produced on average . 
mmcf d of gas and 2 pd of condensate April to une 201 1 .0 
mmcf d of gas and 2 pd of condensate from a single ell 2 
 hile the sidetrac on the other production ell 22 as eing 
drilled. y August ith the upgrade nearing completion the gas 
plant as not availa le for operation. n completion of the gas plant 
upgrade management decided to utilise the capacity entirely for the 
V eld. onse uently the o rins oye eld remained shut in for 
that period.
U enskoye oil eld
 aving reached its fourth year of full time production the u hny 
 ens oye oil eld is the roup s longest esta lished eld. uring 
2012 as in 201 1 the focus as on managing and optimising the 
output from the ve esta lished production ells on the eld. 
Average production for the full year 2012 as 1 10 opd 201 1 
1 1 opd .
 uring 201 1 the roup identi ed the potential to increase 
production from the eld y drilling sidetrac s on t o non producing ells  and . hese ells ere drilled at the edge 
of the eld and ere seen as potential future ater in ection 
 ells. o ever ith clear evidence of good natural ater drive 
in the reservoir it as decided that ater in ection ould not e 
re uired in the medium term and that the ells could e partially 
re drilled into more advantageous locations and put on production. 
 hese drilling operations commenced to ards the end of 201 1. As 
announced on 1 arch 2012 hen the rst of these sidetrac ed 
 ells  as put on stream it produced only ater. his indicates 
that the oil ater contact had migrated to a higher elevation than 
had een anticipated on the asis of cumulative production of oil 
from the eld. n the asis of the ne information the roven and 
 ro a le reserves of the eld have een independently calculated at 
 . million arrels. See the paragraph relating to reserves elo .
A conse uence of the rising oil ater contact is that some of the 
 ells on the eld have since the start of 201 exhi ited some ater 
cut. It is expected that ater separation facilities ill need to e 
installed in order to maintain the production levels. he investment 
re uired for this is li ely to e modest  less than S 1.0 million  and 
may e implemented during 201 .
 he u hny ens oye eld hilst of modest scale remains very 
pro ta le to the roup. ith the eld eing located close to 
mar et and producing high uality oil the sales prices achieved are 
comparatively advantageous. urthermore as the oil is sold directly 
at the eld facilities the eld ears no oil transportation costs. It as 
developed at a cost of S 1. 1 per arrel of 2 reserves and ene ts 
from very lo production costs averaging S 1. per arrel in 2012 
 201 1 S 2.00 per arrel .
Exploration activity
 he roup drilled t o exploration ells completed during 2012 in 
ful lment of outstanding licence o ligations.
Urozhainoye-2 licence area
 rilling operations on the R 1 exploration ere completed during 
 1 2012 ith no commercial hydrocar ons found. he ell as 
conse uently plugged and a andoned and the costs of the ell 
have een ritten o . uring the period the roup ac uired for 
a nominal sum the rights to produce from the So olevs aya 11 
 ell an oil discovery drilled y a former licensee. he So olevs aya 
 11 ell has recently een successfully or ed over and after 
installation of production facilities at the ell site ill provide an 
additional al eit modest production stream.
Pre-Caspian licence area
 uring 2 2012 an exploration ell on the irnaya prospect as 
drilled. o hydrocar ons ere identi ed in the potential target 
 urassic and riassic layers. n conclusion of the operations the ell 
 as plugged and a andoned.
Oil, gas and condensate reserves as of 1 January 2012
 uring 2012 an independent evaluation of the ompany s oil gas 
and condensate reserves as conducted y iller and ents td. 
 he independent assessment of the reserves and net present 
value of future net revenue V attri uta le to the ompany s 
three principal elds o rins oye Vostochny a arovs oye and 
 ens oye as at 1 August 2012 as prepared in accordance ith 
reserve de nitions prepared y the il and as Reserves ommittee 
of the Society of etroleum ngineers S . he V evaluation 
 as conducted on a constant pricing asis assuming no future 
escalations of oil prices operating expenses capital or mineral 
extraction taxes a ove the respective 1 August 2012 values.
 he reserve report attri utes roved and ro a le 2 reserves 
of 1 .1 million arrels mm l of oil and condensate and 1 . 
 illion cu ic feet cf of gas a total of .0 million arrels of oil 
e uivalent mm oe to the ompany s principal elds and a V 
of S 01.2 million ith a 10% per annum discount rate.
 he follo ing ta le sho s the roven and ro a le reserves as 
evaluated y iller  ents as at 1 August 2012.
Mikhail Ivanov
 hief xecutive cer
Oil, gas and condensate reserves 
As at 1 August 2012
Proved Reserves
Oil and 
condensate 
(mmbbl)
Gas 
(bcf)
Total 
(mmboe)
NPV 10% 
US$ million
 ens oye . 2 0.0 . 2 . o rins oye 1. 2 2 . . 2 1. V . 1 .2 0.1 201. Total Proved Reserves
14.800 156.6 40.900 292.4
Proved plus Probable Reserves
Oil and 
condensate 
(mmbbl)
Gas 
(bcf)
Total 
(mmboe)
NPV 10% 
US$ million
 ens oye . 0.0 . 2. o rins oye 1. 2 2 . . 2 1. V . 1 .1 2. 22 20 .2
Total Proved plus Probable Reserves
16.104 167.5 44.027 301.2
 otes 1. uture net revenues are de ned as the total gross revenues less operating costs ineral xtraction ax  and capital expenditures. he total gross revenues are the total 
revenues received at the ellhead. he future net revenues include deductions for other capital and property taxes ut do not include deductions for pro t taxes. 
2. he constant price assumptions used in the calculation of future cash o s ere as follo s rude il  S . per arrel ondensate  S . per arrel atural as  
 S 2. 0 per mcf.  8
Business Overview
 inancial Revie Results for the year
In 2012 the roup generated S 2 . million in turnover 201 1 
 S 2 . million from the sale of 2 01 arrels of crude oil and 
condensate 201 1 1 arrels and 1 1 million cu ic feet of 
natural gas 201 1 1 million cu ic feet . il and condensate sales 
 ere made into the domestic mar et during the period. In the early 
part of 2012 the gas sales proceeds ere o set against payments 
of de t outstanding et een a neftedo ycha and rans afta 
 ut from April 2012 all gas sales ere made for cash payment. he 
average price realised for li uids as the e uivalent of S .21 
per arrel 201 1 S . 0 per arrel . he contract price for gas 
sales during 2012 averaged S 2. 2 per thousand cu ic feet 201 1 
 S 2. per thousand cu ic feet . ith sales made exclusively into 
the regional mar et in the Volga region at the ellhead our oil and 
condensate sales prices closely re ect international prices ad usted 
for export taxes and transportation costs. roduction activities 
generated a gross pro t of S 12. million in 2012 201 1 gross pro t 
of S 1 .0 million .
In 2012 the total cost of production increased to S 2. million 
 201 1 S 2. million including a full year of operating costs  
of the o rins oye gas plant and eld. roduction ased taxes  
 ere lo er at S . million 201 1 S . million re ecting  
lo er rates of ineral xtraction ax  for condensate  
o set partly y higher  rates for crude oil and natural gas  
and lo er production volumes.  in 2012 represented 1. %  
of revenues 201 1 . % of revenues . he gross pro t margin  
in 2012 as . % 201 1 . % .
 perating and administrative expenses in 2012 included a provision 
of S 2. million for disputed recovery of VA 201 1 nil hile other 
operating and administrative expenses ere S . million 201 1 
 S . million .
 uring the rst half of 2012 the roup continued extended 
production testing on the Vostochny a arovs oye gas condensate 
 eld. he full costs incurred including installation of test 
e uipment and operating costs ere expensed during this period. 
 hese costs o set y condensate sales from test production 
 ere included in exploration and evaluation expenses. ollo ing 
the start up of commercial production from V in cto er 2012 
revenues and costs associated ith this eld ere included in the 
Income Statement.
 he roup experienced a decline in I A de ned as operating 
pro t efore non cash charges including the VA provision 
exploration expense depletion and depreciation to S .0 million 
 201 1 S . million as a result of the higher operating costs and 
slightly lo er revenues.
After recording an exploration and evaluation expense of S . 
million 201 1 S 0.2 million and other non cash expenses of 
 S 0.2 million 201 1 S . million the roup recorded an 
operating loss for 2012 of S . million 201 1 operating pro t 
of S 0. million . he exploration and evaluation expense arose 
primarily from the t o unsuccessful exploration ells on hich 
drilling as completed during 2012 re ecting impairment of 
capitalised costs and actual expenditure incurred in 2012. 
Sales volumes 2012 2011 2010
 il and condensate arrels 2 01 1 0 0 0 
 as mcf 1 1 1 Total (boe)
728,334 771,479 407,050 
Operating results (US$ 000) 2012 2011 2010
 il and condensate sales 2 2 2 2 1 0 2 
 as sales 2 1
Revenue
28,295 28,571 13,052 
 roduction costs 2 2 1
 roduction ased taxes 1 2
 epletion depreciation and 
other 2 2 0 2 1 1 0
 ther 1 1 1 11
Cost of sales
(15,648) (15,582) (6,840)
Gross pro t 12,647 12,989 6,212 
 xploration expense 200 2
 rovision for VA recovery 2
 ther operating  
administrative expenses 0
 rite o of development 
assets 1 12 
Operating pro t (loss)
(5,906) 473 (22,458)
Net realisation 2012 2011 2010
 il and condensate S arrel .21 . 0 2.0 
 as S mcf 2.22. n.a. 
Operating data (US$/boe) 2012 2011 2010
 roduction costs .2 .1 1.0 
 roduction ased taxes 12.2 12. 12. 1 
 epletion depreciation and 
other .1 .22. 
EBITDA calculation (US$ 000) 2012 2011 2010
 perating pro t loss 0 22
 xploration expense 200 2
 A and other non cash 
expense 1 2 1 1 0
EBITDA
7,982 8,926 2,629 
Financial and 
operational summary VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
9
After including net interest expense of S 0.2 million 201 1 interest 
income of S 0.2 million and foreign exchange and other losses of 
 S 0.2 million 201 1 S 1. million the roup recognised a loss 
 efore tax of S . million 201 1 S 1.1 million and reported net 
loss after tax of S . million 201 1 S 1.1 million after ta ing a 
deferred tax charge of S 1.1 million 201 1 S 1 000 .
 o dividends have een paid or proposed for the year 201 1 nil .
Cash ow
 roup cash o from operating activities as S . million 201 1 
 S . million . he net cash o of the roup as reduced y 
 S 1.1 million of gas sales eing applied to repayment of rans afta 
loans 201 1 S .1 million as ell as settlement of disputed VA 
for hich a S 2. million 201 1 nil provision for recovery has een 
made. et or ing capital movements contri uted to a cash in o 
of S 2. million in 2012 201 1 S 1. million out o from or ing 
capital movements . ith increased capital expenditures in 2012 
the net out o from investing activities as S 1 . million 201 1 
 S . million . et cash in o from nancing activities as S . 
million 201 1 out o of S 1 . million ith the dra ing of the 
 an facility o set y nal repayments of the rans afta de t and 
the commencement of amortisation payments under the an loan. 
 uring 201 1 the ma ority of the net cash out o from nancing 
arose from the repayment of de ts o ed y  to its former 
o ner rans afta amounting to S 1 . million.
Capital Expenditure
 uring 2012 a total of S 1 . million as utilised in investing 
activities 201 1 S . million as detailed elo
2012 
(US$ million)
2011 
(US$ million)
 il and gas exploration assets . . evelopment and producing assets 10. 0. Ac uisition net of cash ac uired 0. Total
13.7 5.6
 he most signi cant individual components of the capital 
expenditure ere on development and producing assets and 
primarily relates to the o rins oye gas plant upgrade and to drilling 
of sidetrac s to the ells on the o rins oye eld. xpenditure on 
exploration as on t o exploration ells completed during 2012 
 oth of hich ere ritten o in the year. 
Balance sheet and nancing
As at 1 ecem er 2012 the roup held cash and an deposits 
of S .0 million 201 1 S 10.1 million and total an de t 
outstanding of S .0 million 201 1 nil including a current portion 
of S . million 201 1 nil . he an loan as dra n during 2012 
and is su ect to monthly repayments hich commenced in cto er 
2012. As at 1 ecem er 201 1 there ere loans paya le y a roup 
company to rans afta of S .2 million hich ere repaid during 
2012. All of the roup s cash alances are held in an accounts in 
the  and Russia.
As at 1 ecem er 2012 the roup s intangi le assets decreased 
to S . million 201 1 S . million as licence costs relating to 
producing elds ere reclassi ed as property plant and e uipment 
 hich conse uently increased to S 10 . million 201 1 S 0. 
million . ther increases in property plant and e uipment re ect 
investment in the gas plant upgrade and drilling of ell sidetrac s on 
the o rins oye eld.
 he roup intends to fund its continuing development and 
exploration expenditures using a com ination of cash o from 
operations and cash on hand. he roup ill consider additional 
de t facilities to fund the longer term development of its existing 
licences as appropriate. 
 he roup s nancial statements are presented on a going 
concern asis.
Tony Alves
 hief inancial cer 10
 he roup is su ect to various ris s relating to political economic 
legal social industry usiness and nancial conditions.
 he follo ing ris factors hich are not exhaustive are particularly 
relevant to the roup s usiness activities Volatility of prices for oil and gas
 he supply demand and prices for oil and gas are volatile and are 
in uenced y factors eyond the roup s control. hese factors 
include glo al and regional demand and supply exchange rates 
interest and in ation rates and political events. A signi cant 
prolonged decline in oil and gas prices could impact the via ility 
of some of the roup s exploration and development activities. 
Additionally the roup s production is predominantly sold in the 
domestic Russian mar ets hich are in uenced y domestic supply 
and demand factors the level of Russian export taxes and regional 
transportation costs.
Su stantially all of the roup s revenues and cash o s come from 
the sale of oil gas and condensate. If sales prices should fall elo 
and remain elo the roup s cost of production for any sustained 
period the roup may experience losses and may e forced to 
curtail or suspend some or all of the roup s production at the time 
such conditions exist. In addition the roup ould also have to 
assess the economic impact of lo oil and gas prices on its a ility to 
recover any losses the roup may incur during that period and on the 
 roup s a ility to maintain ade uate reserves.
 he roup does not currently hedge its crude oil production to 
reduce its exposure to oil price volatility.
Oil and gas production taxes
 he roup s sales generated from oil and gas production are su ect 
to ineral xtraction axes hich form a material proportion of the 
total costs of sales. he rates of these taxes are su ect to changes 
 y the Russian government. Recently implemented changes to rates 
have reduced the e ective rates on condensate and increased rates 
on crude oil and natural gas.
Exploration and reserve risks
 hilst the roup ill see to apply the latest technology to assess 
exploration licences the exploration for and development of 
hydrocar ons is speculative and involves a high degree of ris . 
 hese ris s include the uncertainty that the roup ill discover 
su cient commercially exploita le oil or gas resources. nsuccessful 
exploration e orts may result in impairment to the alance sheet 
value of exploration assets.
 uring 2012 the roup commissioned a reserve evaluation ased 
on reporting standards set y the Society of etroleum ngineers. 
If the actual results of producing the roup s elds are signi cantly 
di erent to expectations there may e changes in the future 
estimates of reserves. hese may impact the alance sheet values 
of the roup s Intangi le Assets and the roup s roperty lant 
and uipment.
Environmental risk
 he oil and gas industry is su ect to environmental ha ards such as 
oil spills gas lea s ruptures and discharges of petroleum products 
and ha ardous su stances. hese environmental ha ards could 
expose the roup to material lia ilities for property damages 
personal in uries or other environmental harm including costs of 
investigating and remediating contaminated properties. 
Business Overview
 rincipal Ris s and ncertainties VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
 he roup is su ect to stringent environmental la s in Russia ith 
regards to its oil and gas operations. ailure to comply ith such la s 
and regulations could su ect the roup to material administrative 
civil or criminal penalties or other lia ilities. Additionally compliance 
 ith these la s may from time to time result in increased costs to 
the roup s operations impact production or increase the costs of 
potential ac uisitions. 
 he roup liaises closely ith the ederal Service of nvironmental 
 echnological and uclear Resources of the Saratov and Volgograd 
 lasts on potential environmental impact of its operations 
and conducts environmental studies oth as re uired y and in 
addition to its licence o ligations to mitigate any speci c ris . 
 he roup s operations are regularly su ect to independent 
environmental audit.
 he roup did not incur any material costs relating to the compliance 
 ith environmental la s during the period.
Risk of operating oil and gas properties
 he oil and gas usiness involves certain operating ha ards such as 
 ell lo outs cratering explosions uncontrolla le o s of oil gas 
or ell uids res pollution and releases of toxic su stances. Any 
of these operating ha ards could cause serious in uries fatalities 
or property damage hich could expose the roup to lia ilities. 
 he settlement of these lia ilities could materially impact the 
funds availa le for the exploration and development of the roup s 
oil and gas properties. he roup maintains insurance against 
many potential losses and lia ilities arising from its operations in 
accordance ith customary industry practices ut the roup s 
insurance coverage cannot protect it against all operational ris s.
Foreign currency risk
 he roup s capital expenditures and operating costs are 
predominantly in Russian ru les R R hile a minority of costs 
are also in S dollars. Revenues are in R R and funding has een 
raised in S dollars and to a minor extent in euros. Any changes in 
the relative exchange rates among S dollar euros and R R could 
positively or negatively a ect the roup s results.
Business in Russia
Amongst the ris s that face the roup in conducting usiness and 
operations in Russia are > conomic insta ility including in other countries or the glo al 
economy that could lead to conse uences such as hyperin ation 
currency uctuations and a decline in per capita income in the 
Russian economy.
 > overnmental and political insta ility that could disrupt delay 
or curtail economic and regulatory reform increase centralised 
authority or result in nationalisations.
 > Social insta ility from any ethnic religious historical or other 
divisions that could lead to a rise in nationalism social and 
political distur ances or con ict.
 > ncertainties in the developing legal and regulatory 
environment including ut not limited to con icting la s 
decrees and regulations applica le to the oil and gas industry and 
foreign investment.
 > nla ful or ar itrary action against the roup and its interests y 
the regulatory authorities including the suspension or revocation 
of their oil or gas contracts licences or permits or preferential 
treatment of their competitors. 
 > ac of independence and experience of the udiciary di culty 
in enforcing court or ar itration decisions and governmental 
discretion in enforcing claims.
 > xpected changes to the federal and local tax systems.
 > a s restricting foreign investment in the oil and gas industry.
Legal systems
Russia and other countries in hich the roup may transact usiness 
in the future have or may have legal systems that are less ell 
developed than those in the nited ingdom. his could result in 
ris s such as > otential di culties in o taining e ective legal redress in the 
court of such urisdictions hether in respect of a reach of 
contract la or regulation including an o nership dispute.
 > A higher degree of discretion on the part of governmental 
authorities.
 > he lac of udicial or administrative guidance on interpreting 
applica le rules and regulations.
 > Inconsistencies or con icts et een and ithin various la s 
regulations decrees orders and resolutions.
 > Relative inexperience of the udiciary and courts in such matters.
In certain urisdictions the commitment of local usiness people 
government o cials and agencies and the udicial system to a ide 
 y legal re uirements and negotiated agreements may e more 
uncertain creating particular concerns ith respect to licences and 
agreements for usiness. hese may e suscepti le to revision or 
cancellation and legal redress may e uncertain or delayed. here 
can e no assurance that oint ventures licences licence applications 
or other legal arrangements ill not e adversely a ected y the 
 urisdictions in hich the roup operates.
Liquidity risk
At 1 ecem er 2012 the roup had S .0 million of 
cash and cash e uivalents availa le to fund its ongoing 
operations and associated exploration and development activities. 
At 1 ecem er 2012 the roup has had approved capital 
expenditures of approximately S 1 million primarily for the 
continuing development of gas and condensate production. It also 
had as at 1 ecem er 2012 a an loan outstanding of S .0 
million hich is currently eing amortised. All current and planned 
capital expenditures are discretionary.
 hrough its ordinary course activities the roup is exposed to 
legal operational and development ris that could delay gro th 
in its cash generation from operations or may re uire additional 
capital investment that could place increased urden on the roup s 
availa le nancial resources. 
Tony Alves
 hief inancial cer 12
Corporate Governance
 oard of irectors
Aleksey Kalinin
Non-Executive Chairman
Appointed to the oard 1 arch 200 ommittee mem ership Remuneration
 r alinin is a Senior artner of aring Vosto apital artners. e 
 oined aring Vosto in 1 from Alfa apital here he served for 
six years as the irector of the epartment for irect Investments. 
Ale sey represents the interests of aring Vosto s funds on the 
 oard of irectors of a ide range of portfolio companies. e has a 
doctorate from the osco o er ngineering Institute here he 
conducted scienti c research lectured for 12 years and served as the 
 irector of the outh enter for Scienti c and echnical reativity. 
 r alinin is  years old.
Mikhail Ivanov
Chief Executive O cer, Executive Director
Appointed to the oard 1 arch 200 ommittee mem ership n a
 r Ivanov is a artner and irector of il and as ro ects at aring 
Vosto apital artners. r Ivanov rings ith him a long history 
of involvement in the oil sector. i hail or ed for over ten years 
at Shlum erger the international oil services company here 
he served as head of its Iran operations and as responsi le for 
 usiness development in Russia. rior to oining Shlum erger he 
founded and headed t o companies that focused on oil production 
and service. In 200 he as appointed non executive director 
of hai munai roup imited. r Ivanov holds an .S. degree in 
 eophysics from ovosi irs State niversity and an . .A. from 
the ellogg School of anagement of orth estern niversity. e 
is an elected mem er of S . r Ivanov is  years old.
Antonio Alves
Chief Financial O cer, Executive Director
Appointed to the oard 12 anuary 200 ommittee mem ership n a
 r Alves has had experience ith the independent the oil and gas 
industry for over 20 years as one of the leading e uity analysts 
covering the sector. rior to oining Volga as he as head of oil 
and gas research for  eel unt and as closely involved ith 
the ompany s 200 I . e previously held positions ith Investec 
Securities he ell roup International and Schroders. e is a 
 em er of the Securities Institute and of the etroleum xploration 
Society of reat ritain. e read mathematics at am ridge 
 niversity et een 1 and 1 oth as an undergraduate and a 
post graduate research student. r Alves is  years old.
Ronald Freeman
Non-Executive Director
Appointed to the oard 1 arch 200 ommittee mem ership Audit omination Remuneration
 r reeman is a non executive oard director of Severstal 
 herepovets Russia . e is also hairman of the xecutive 
 ommittee of the Atlantic ouncil ashington  a mem er 
of the International Advisory ommittee of olum ia a School 
 e or and co chairman of the nance committee of the 
 S ul right ommission ondon . rom 1 to 1 1 and 
from 1 until his retirement from itigroup as co head of 
 uropean Investment an ing in 2000 he as an investment 
 an er specialising in nancing and mergers and ac uisition for 
companies in the oil and gas industry ith Salomon rothers 
no a unit of itigroup. rom 1 1 to 1 he as head of the 
 an ing epartment of the uropean an for Reconstruction and 
 evelopment ondon . rior to that he practiced la ith a er 
 c en ie aris and served as a management consultant in the 
 aris o ce of c insey  ompany. r reeman as orn in e 
 or and has dual S and  citi enship. e has a .A from ehigh 
 niversity and an . . from olum ia a School 1 . e as 
admitted to the ar of the State of e or . e is  years old. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
13
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Stephen Ogden
Non-Executive Director
Appointed to the oard 1 arch 200 ommittee mem ership Audit omination Remuneration
 r gden is the ounder  anaging artner of the irst 
 ontenegro Stone roperty und and the o ounder  anaging 
 artner of the Istan ul ased era roperty und. r gden is 
the hairman of the oard of rint Russia . r gden is the 
former hairman of the oard of enta Russia s largest privately 
o ned food retailer and as previously a non executive director 
of nited onfectioneries Russia eine en Russia and etropolis 
 edia former ugoslavia . e as hief inancial cer of the 
 och arev re ery in St. eters urg from 1 to 2002. rior to 
 ecoming hief inancial cer of och arev r gden as an 
auditor ith  and rice aterhouse oopers and inancial 
 ontroller of S irst oston osco . r gden has a oint 
honours degree in economics  politics from urham niversity 
 ngland and is a uali ed ritish chartered accountant A . 
 r gden is active in ritish politics. e is a former onservative 
 ouncillor of Altrincham heshire and his name is on the approved 
list of onservative arliamentary candidates. r gden is a co founder and treasurer of the charita le R anda ric et Stadium 
 oundation. r gden is  years old. 
Michael Calvey
Non-Executive Director
Appointed to the oard 1 arch 200 ommittee mem ership Audit omination
 r alvey is a Senior artner of aring Vosto apital artners 
and a irector of aring rivate uity International and is on the 
 oards of several of aring Vosto s portfolio companies. e egan 
 or ing in osco in 1 as one of the mem ers of the consulting 
committee of the irst IS Regional und. e is a mem er of the 
investment committees of three aring Vosto funds. e is also 
a mem er of the Investment ommittees of the aring Asia and 
 aring India funds. efore 1 r alvey lived in ondon and e 
 or here he or ed at the uropean an for Reconstruction 
and evelopment R and Salomon rothers. At R he 
 as responsi le for investments in the energy sector of entral 
and astern urope. At Salomon rothers r alvey or ed on 
mergers and ac uisitions and capital mar et pro ects in the oil and 
gas sector. e is a mem er of the oards of the Atlantic ouncil and 
the merging ar ets rivate uity Association and is a mem er 
of the Advisory oard of the entre for International usiness and 
 anagement at am ridge niversity. r alvey is  years old.
 Vladimir Koshcheev
Non-Executive Director
Appointed to the oard 1 arch 200 ommittee mem ership n a
 r oshcheev currently acts as resident of oint Stoc ompany 
 . ntil 200 he as resident of ervaya Investi ionno Stroitelnaya ompany  Spina er . e has een hairman 
of S A S since 2002. r oshcheev as resident of 
 rivol hs aya eftyanaya ompany  et een 200 and 200 
and as previously a shareholder in and acted as resident of Vesla. 
 r oshcheev received a specialist diploma from osco State 
 echnical niversity in 1 and he is a mem er of the Russian 
Academy of atural Sciences. r oshcheev is  years old. 14
Corporate Governance
Corporate Governance Statement
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 UK Corporate Governance 
Code (the “Code”) 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 2012 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 e ective controls which 
enables risk to be assessed and managed. The Board sets the 
Group’s strategic aims and ensures that the necessary nancial 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 nal nancial statements
 > Management structure and appointments
 > Mergers, acquisitions, disposals
 > Capital raising
 >Signi cant changes in accounting policies
 > Appointment or removal of Directors or the Company Secretary
Board composition
The Board currently comprises two executive directors and 
 ve non-executive directors, of whom three are deemed to be 
independent and two non-independent:
 > Aleksey 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 a ord 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 in uence 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 bene cial 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 UK Corporate 
Governance 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 nancial statements, signi cant accounting 
and nancial 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 O cer, Chief Financial O cer, 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 19 to 20.
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 ll Board positions as and 
when they arise. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
15
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Board meetings
The Board met ve times during the year ended 31 December 2012 
(201 1: six times) with the following attendance:
2012 2011
Aleksey Kalinin 5 5
Mikhail Ivanov 5 6
Tony Alves 5 6
Ronald Freeman 5 6
Stephen Ogden 5 6
Vladimir Koshcheev 4 4
Michael Calvey
56
Indemni cation 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 o ce. In respect of those matters 
for which the directors may not be indemni ed, the Company 
maintained a directors’ and o cers’ liability insurance policy 
throughout the nancial year. This policy has been renewed for the 
next nancial 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 Ivanov, 
Kalinin and Koshcheev 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 e ectiveness. 
Any system of internal control can only provide reasonable, and 
not absolute, assurance that material nancial 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, nancial, 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 signi cant 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 7 June 2012, 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 2013 16
Corporate Governance
Report of the Directors
The directors present their report together with the Group’s 
audited consolidated nancial statements for the period from 
1 January 2012 to 31 December 2012.
Results and dividend
The Group’s results are set out on pages 22 to 26 and show net loss 
of US$6.9 million for the year to 31 December 2012 (201 1: net loss 
of US$1.1 million). The directors do not propose to pay a dividend 
(201 1: nil).
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 elds in the Volga Region of European 
Russia. The Group owns 100% of ve licence areas in the Saratov 
and Volgograd regions: Karpenskiy, Vostochny-Makarovskoye, 
Dobrinskoye, Pre-Caspian and Urozhainoye-2.
The Group’s business strategy is to continue the development of the 
Vostochny Makarovskoye eld and to manage production on the 
Dobrinskoye and Uzenskoye elds whilst at the same time exploring 
the potentially prospective structures on the Group’s licence areas. 
The Group also regularly evaluates acquisition opportunities as part 
of its overall growth strategy.
Highlights of the Group’s activities for the period ended 31 
December 2012 are:
 > Completion of the rst two stages of a programme to upgrade 
the gas processing facility at the site of the Dobrinskoye gas/
condensate eld which enabled the commencement of full time 
production from the Vostochny-Makarovskoye eld.
 > Continued and steady production from the Yuzhny Uzenskoye oil 
 eld on the K A.
 > Successful redevelopment of the two production wells on the 
Dobrinskoye eld.
 > Independent assessment of Group oil, gas and condensate 
reserves.
The Group’s activities are described in greater detail in the Chief 
Executive’s Report on page 5 and in the Operational Review on 
pages 6 and 7 . The principal risks associated with the Group’s 
activities are set out in the Financial Review on pages 8 and 9.
Key performance indicators
Given the nature of the business and that the Group has only two 
operating elds, the directors are of the opinion that further 
analysis using KPIs 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 6 and 7 provides the relevant information.
Directors
The directors who served during the year were:
Aleksey Kalinin, Non-Executive Chairman
Mikhail Ivanov, Chief Executive O cer
Michael Calvey, Non-Executive
Tony Alves, Chief Financial O cer
Ronald Freeman, Non-Executive
Vladimir Koshcheev, Non-Executive
Stephen Ogden, Non-Executive
Messrs Kalinin, Koshcheev and Freeman will retire by rotation and 
o er themselves for re-election in accordance with the Company’s 
Articles of Association.
Directors’ interests
The directors serving during the year had the following bene cial 
interests in the shares of the Company:
Ordinary Shares of 0.01p each
31 December 
2012
31 December 
2011
Aleksey Kalinin
1
––
Mikhail Ivanov 1,000,000 1,000,000
Tony Alves 25,000 25,000
Ronald Freeman 55,000 55,000
Stephen Ogden 105,000 105,000
Vladimir Koshcheev
2
600,000 650,000
Michael Calvey
1
––
1 Mr Calvey and Mr Kalinin are Co-Managing Partners of Baring Vostok Capital 
Partners imited, a related party to Baring Vostok Nominees imited and Dehus 
Dolmen Nominees imited. As such Mr Calvey and Mr Kalinin have an indirect 
bene cial interest in the Company.
2 On 11 January 2013, Mr. Koshcheev disposed of 80,790 shares and his bene cial 
interest in the Company consequently reduced to 519,210 shares.
Substantial shareholders
On 28 March 2013 the following parties had noti able interests of 
3% or greater in the nominal value of the Company’s issued 0.01p 
ordinary shares:
Number of 
shares Percentage
Baring Vostok Nominees td
1
39,620,000 48.90
Dehus Dolmen Nominees td
2
7,906,889 9.76
JP Morgan Asset Management (UK) 
 imited 4,404,600 5.55
BlackRock Investment Management 
(UK) imited 2,464,008 3.04
BNP Paribas Investment Partners S.A.
2,450,000 3.02
1 Baring Vostok Nominees td is a nominee vehicle which holds the interests of the 
limited partnerships which comprise Baring Vostok Private Equity Fund III.
2 Dehus Dolmen Nominees td is a nominee vehicle which holds the interests of the 
limited partnerships which comprise Baring Vostok Private Equity Fund IV. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
17
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 2012 
options over 379,154 shares (201 1: 432,47 4 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 signi cant 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:
(i) agree the terms of the payment at the start of the business with 
that supplier;
(ii) ensure that suppliers are aware of the terms of the payment; 
and
(iii) pay in accordance with contractual and other obligations.
Political and charitable contributions
No political or charitable contributions were made in the year 
(201 1: nil).
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 sta members who become disabled 
during employment.
Employee communication
The Group is committed to e ective communications, which it 
maintains through regular information releases and sta brie ngs. 
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 icence 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 
Company has ensured that all its activities minimise the impact on 
this sensitive environment.
UK Bribery Act
The Company has adopted Anti-Corruption and Anti-Bribery 
Policies and a framework of adequate procedures for managing 
the Volga Gas Group’s responsibilities in relation to the UK Bribery 
Act 2010.
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 8 June 2012 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) 15 months from the passing of the 
Resolution, or (ii) the conclusion of the Annual General Meeting of 
the Company to be held in 2013.
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 bene ts 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.
Statement of disclosure of information to auditors
As at the date of this report the serving directors con rm 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
During 2012, following a review of audit arrangements, the Board 
decided to appoint KPMG Audit Plc as the Company’s auditors. 
KPMG Audit Plc, have indicated their willingness to continue in 
o ce 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 nancial statements 
for each nancial year. As required by the AIM Rules of the ondon 
Stock Exchange, they are required to prepare the Group nancial 
statements in accordance with International Financial Reporting 
Standards (IFRSs) as adopted by the European Union and applicable 
law and have elected to prepare the parent Company nancial 
statements on the same basis. Under company law the directors 
must not approve the nancial statements unless they are satis ed 
that they give a true and fair view both of the state of a airs of the 
Group and the Company and of the pro t or loss of the Group for 
that period. 18
In preparing the Group and parent Company nancial 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 nancial statements on the going concern basis 
unless it is inappropriate to presume the Group and parent 
Company 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 nancial statements.
The directors are responsible for keeping adequate accounting 
records that are su cient to show and explain the Company’s 
transactions and disclose with reasonable accuracy at any time 
the nancial position of the Company and the Group and enable 
them to ensure that the nancial statements and the directors’ 
remuneration report comply with the Companies Act 2006 and, 
as regards the Group nancial 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 nancial statements 
since they were initially presented on the website.
The Company’s website is maintained in compliance with AIM 
Rule 26.
 egislation in the United Kingdom governing the preparation and 
dissemination of nancial statements may di er from legislation in 
other jurisdictions.
On behalf of the Board
Aleksey Kalinin
Chairman of the Board
28 March 2013
Corporate Governance
Report of the Directors continued VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
19
Corporate Governance
Directors’ Remuneration Report
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 14 to 15.
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 Aleksey 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 xed 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 6 
months’ notice during the rst 24 months of service and thereafter 
by giving 3 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 re ect 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 O cer. 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 O cer.
Audited Information – Directors detailed emoluments
Salary 
US$’000
Pension 
Contribution 
US$’000
Share-based 
Compensation 
US$’000
Fees 
US$’000
Aggregate 
Remuneration 
for the Year 
31 December 
2012 
US$’000
Aggregate 
Remuneration 
for the Year
 31 December 
2011 
US$’000
Executive Directors
M. Ivanov 400 – – – 400 338
A. Alves 236 81 – – 317 328
Non-Executive
A. Kalinin – – – – – –
R. Freeman – – – 50 50 50
S. Ogden – – – 50 50 50
V. Koshcheev – – – – – –
M. Calvey
–– – – – – 20
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 page 16. There has been 
no change in the interest of any director between 1 January 2012 
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 speci ed 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, 201 1 and 2012 and will remain 
outstanding until May 2017 . On 17 December 2008, Tony Alves 
was granted options to acquire up to 568,732 ordinary shares in 
the Company at an exercise price of 100p per share. The options 
vest over a period of up to four years subject to the satisfaction 
of performance conditions 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 
2012, options over 379,154 shares became eligible for vesting (201 1: 
432,47 4 shares).
By order of the Board
Tony Alves
Company Secretary
28 March 2013
Corporate Governance
Directors’ Remuneration Report continued VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
21
We have audited the nancial statements of Volga Gas plc for the 
year ended 31 December 2012 set out on pages 22 to 43.
The nancial reporting framework that has been applied in their 
preparation is applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the EU and, as regards the parent 
Company nancial statements, as applied in accordance with the 
provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in 
accordance with Chapter 3 of Part 16 of the Companies Act 2006. 
Our audit work has been undertaken so that we might state to the 
Company’s members those matters we are required to state to 
them in an auditor’s report and for no other purpose. To the fullest 
extent permitted by law, we do not accept or assume responsibility 
to anyone other than the Company and the Company’s members, 
as a body, for our audit work, for this report, or for the opinions we 
have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement 
set out on page 17 , the directors are responsible for the preparation 
of the nancial statements and for being satis ed that they give 
a true and fair view. Our responsibility is to audit, and express an 
opinion on, the nancial 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.
Scope of the audit of the nancial statements
A description of the scope of an audit of nancial statements 
is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate.
Opinion on nancial statements
In our opinion:
 >the nancial statements give a true and fair view of the state 
of the Group’s and of the parent Company’s a airs as at 31 
December 2012 and of the Group’s loss for the year then ended;
 > the Group nancial statements have been properly prepared in 
accordance with IFRSs as adopted by the EU;
 > the parent Company nancial statements have been properly 
prepared in accordance with IFRSs as adopted by the EU and as 
applied in accordance with the provisions of the Companies Act 
2006; and
 >the nancial 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 information given in the Directors’ Report for 
the nancial year for which the nancial statements are prepared is 
consistent with the nancial 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 nancial statements are not in agreement 
with the accounting records and returns; or
 > certain disclosures of directors’ remuneration speci ed by law 
are not made; or
 > we have not received all the information and explanations we 
require for our audit.
Adrian ilcox (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
8 Salisbury Square
 ondon
EC4Y 8BB
1 April 2013
Financial Statements
Independent Auditors’ Report to
the Members of Volga Gas plc 22
Financial Statements
Group Income Statement
(presented in US$ 000)
Year ended 31 December Notes 2012 2011
Continuing Operations
Revenue 28,295 28,571
Cost of sales 5 (15,648) (15,582)
Gross pro t 12,647 12,989
Exploration and evaluation expense 5 (8,475) (200)
Operating and administrative expenses 5 (9,890) (6,704)
Write o of development assets 5 (188) (5,612)
Operating (loss)/pro t (5,906) 473
Interest income 6 185 219
Interest expense (415) –
Other losses – net 7 (172) (1,810)
Loss for the year before tax (6,308) (1,118)
Current income tax 8––
Deferred income tax 8 (1,113) (18)
Loss for the year (7,421) (1,136)
Attributable to:
The owners of the parent Company
(7,421) (1,136)
Basic and diluted loss per share (in US dollars) 9 (0.09) (0.01)
Weighted average number of shares outstanding 81,017,800 81,017,800
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the parent Company income 
statement. The loss for the parent Company for the year was US$1,338,000 (201 1: US$1,432,000).
Group Statement of Comprehensive Income
(presented in US$ 000)
Year ended 31 December 2012 2011
Loss for the year attributable to equity shareholders of the Company (7,421) (1,136)
Other comprehensive income:
Currency translation di erences 6,677 (6,458)
Total comprehensive income (expense) for the year (744) (7,594)
Attributable to: 
The owners of the parent Company
(744) (7,594)
The accompanying notes on pages 27 to 43 are an integral part of these nancial statements. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
23
Financial Statements
Group Balance Sheet
(presented in US$ 000)
At 31 December Notes
Group 
2012
Group 
2011
Assets
Non-current assets
Intangible assets 10 9,646 39,522
Property, plant and equipment 11 103,703 60,794
Other non-current assets 12 798 1,855
Deferred tax assets 8 2,062 5,560
Total non-current assets 116,209 107,731
Current assets
Cash and cash equivalents 13 7,049 10,099
Inventories 14 1,235 1,851
Other receivables 15 2,330 2,409
Total current assets 10,614 14,359
Total assets 126,823 122,090
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 (13,619) (20,296)
Accumulated loss 21 (39,338) (31,916)
Equity attributable to the shareholders of the parent 114,401 115,146
Non-controlling interests ––
Total equity 114,401 115,146
Non-current liabilities
Asset retirement obligation 330 350
 ong-term debt 18 1,586 –
Total non-current liabilities 1,936 330
Current liabilities
Trade and other payables 19 4,083 6,614
Short-term debt 18 6,403 –
Total current liabilities 10,486 6,614
Total equity and liabilities
126,823 122,090
Approved by the Board of Directors on 28 March 2013 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive O cer Chief Financial O cer
The accompanying notes on pages 27 to 43 are an integral part of these nancial statements. 24
Financial Statements
Group Cash Flow Statement
(presented in US$ 000)
Year ended 31 December Notes
Group 
2012
Group 
2011
Loss for the year before tax (6,308) (1,118)
Adjustments to loss before tax Share grant expense –37
Depreciation 2,280 2,714
Exploration and evaluation expense 8,359 490
Write o of development assets – 5,322
 oan repayment by o set of gas sales (1,132) (3,146)
Other non-cash expenses 57 147
Foreign exchange di erences (262) 1,320
Decrease/(increase) in long-term assets – 1,678
Operating cash ow prior to working capital 2,994 7,444
 orking capital changes
Decrease/(increase) in trade and other receivables 3,156 (1,847)
Decrease in payables (177) (20)
(Increase)/decrease in inventory (528) 78
Cash ow from operations 5,445 5,655
Income tax paid (3) –
Net cash ow generated from operating activities
5,442 5,655
Cash ows from investing activities
Expenditure on exploration and evaluation 10 (3,408) (4,307)
Purchase of property, plant and equipment 11 (10,319) (784)
Acquisition of subsidiary net of cash acquired – (481)
Net cash used in investing activities (13,727) (5,572)
Cash ows from nancing activities
 oans received 10,124 –
 oans repaid (5,294) (15,737)
Net cash provided by nancing activities 4,830 (15,737)
E ect of exchange rate changes on cash and cash equivalents 405 (846)
Net decrease in cash and cash equivalents (3,050) (16,500)
Cash and cash equivalents at beginning of the year 13 10,099 26,599
Cash and cash equivalents at end of the year
13 7,049 10,099
The accompanying notes on pages 27 to 43 are an integral part of these nancial statements. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
25
Financial Statements
Company Balance Sheet
(presented in US$ 000)
Company registration number: 05886534
At 31 December Notes
Company 
2012
Company 
2011
Assets
Non-current assets
Investments 20 152,234 152,134
Intercompany receivables 16,040 15,949
Total non-current assets 168,274 168,083
Current assets
Cash and cash equivalents 13 1,017 2,614
Other receivables 62 60
Total current assets 1,079 2,674
Total assets
169,353 170,757
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 5,233 5,233
Accumulated loss 21 (4,610) (3,272)
Total equity 167,981 169,319
Current liabilities
Intercompany payables 1,357 1,357
Trade and other payables 19 15 81
Total current liabilities 1,372 1,438
Total equity and liabilities
169,353 170,757
Approved by the Board of Directors on 28 March 2013 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive O cer Chief Financial O cer
The accompanying notes on pages 27 to 43 are an integral part of these nancial statements. 26
Financial Statements
Group Statement of Changes in Shareholders’ Equity
(presented in US$ 000)
Attributable to the equity shareholders of the Company
Share 
Capital
Share 
Premium
Other 
Reserves
Accumulated 
Loss
Non-
controlling 
Interests
Total 
Equity
Opening equity at 1 January 2011 1,485 165,873 (13,874) (30,781) (114) 122,590
 oss for the year – – – (1,136) – (1,136)
Transactions with owners
Share capital issued – – – – – –
Share issue costs – – – – – –
Share based payments – – 37 – – 37
Total transactions with owners – – 37 – – 37
Non-controlling interests – – – – 114 114
Currency translation di erences – – (6,459) – – (6,459)
Total comprehensive income – – (6,459) – 114 (6,459)
Closing equity at 31 December 2011
1,485 165,873 (20,296) (31,917) – 115,145
Opening equity at 1 January 2012 1,485 165,873 (20,296) (31,917) – 115,145
 oss for the year – – – (7,421) – (7,421)
Transactions with owners
Share capital issued – – – – – –
Share issue costs – – – – – –
Share based payments – – – – – –
Total transactions with owners – – – – – –
Currency translation di erences – – 6,677 – – 6,677
Total comprehensive income – – 6,677 – 6,742
Closing equity at 31 December 2012
1,485 165,873 (13,619) (39,337) – 114,402
Note
Share 
Capital
Share 
Premium
Other 
Reserves
Accumulated 
Loss
Total 
Equity
Opening equity as at 1 January 2011 1,485 165,873 5,196 (1,840) 170,714
 oss for the year – – – (1,432) (1,432)
Share capital issued – – – – –
Share Issue costs ––– ––
Share based payments 16 – – 37 – 37
Closing equity at 31 December 2011
1,485 165,873 5,233 (3,272) 169,319
Opening equity as at 1 January 2012 1,485 165,873 5,233 (3,272) 169,319
 oss for the year – – – (1,338) (1,338)
Share capital issued ––– ––
Share Issue costs – – – – –
Share based payments – – – – –
Closing equity at 31 December 2012
1,485 165,873 5,233 (4,610) 167,981
The accompanying notes on pages 27 to 43 are an integral part of these nancial statements.
Company Statement of Changes in Shareholders’ Equity
(presented in US$ 000) VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
27
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 o ce is at Ground oor, 17-19 Rochester 
Row, ondon, SW1P 1 T. The Company’s shares are listed on the 
Alternative Investment Market of the ondon Stock Exchange.
These Group consolidated nancial statements were authorised for 
issue by the Board of Directors on 28 March 2013.
2. Summary of signi cant accounting policies
The principal accounting policies applied in the preparation of these 
consolidated nancial 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 nancial statements of Volga have been 
prepared in accordance with International Financial Reporting 
Standards (IFRSs), as adopted by the European Union (EU), 
International Financial Reporting Interpretations Committee 
(IFRIC) interpretations, and the Companies Act 2006 applicable 
to companies reporting under IFRS. The consolidated nancial 
statements have been prepared under the historical cost 
convention, as modi ed by the revaluation of nancial assets and 
 nancial liabilities (including derivative instruments) at fair value 
through pro t or loss.
The preparation of nancial statements in conformity with IFRSs 
requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgement in the process 
of applying the Group’s accounting policies. The areas involving 
a higher degree of judgement or complexity, or areas where 
assumptions and estimates are signi cant to the consolidated 
 nancial 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 nancial statements have been prepared on the 
going concern basis as the directors, having reviewed the future 
cash ow forecasts of the Group, have concluded that the Group 
will continue to have access to su cient 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
(a) New and amended standards and interpretations adopted by 
the Group:
There are no IFRSs or IFRIC interpretations that are e ective for the 
 rst time for the nancial year beginning on 1 January 2012 that 
have a material impact on the Group.
(b) Amended standards and interpretations not relevant to the 
Group:
Financial Statements
Notes to the IFRS Consolidated Financial Statements
For the year ended 31 December 201 2
(presented in US$ 000)
The following new standards, amendments to standards and 
interpretations are mandatory for the rst time for the nancial 
year beginning 1 January 2012, but are not currently relevant for 
the Group:
 > Amendment to IAS 12, “Income taxes” on deferred tax
 > Amendment to IAS 1, “Presentation of nancial statements” 
on OCI
(c) Standards, amendments and interpretations to existing 
standards that are not yet e ective and have not been 
early adopted by the Group. The following new standards, 
amendments to standards and interpretations have been issued, 
but are not e ective for the nancial year beginning 1 January 
2012 and have not been early adopted:
 > IAS 19 (revised 201 1) “Employee bene ts” (e ective 1 January 
2013)
 > IFRS 9 “Financial instruments” (e ective 1 January 2015)
 > IFRS 10 “Consolidated nancial statements” (e ective 1 January 
2013)
 > IFRS 12 “Disclosures of interests in other entities” (e ective 1 
January 2013)
 > IFRS 13 “Fair value measurement” (e ective 1 January 2013)
 > IFRS 1 1, “ Joint arrangements” (e ective 1 January 2013)
 > IAS 27 (revised 201 1) “Separate nancial statements” (e ective 1 
January 2013)
 > IAS 28 (revised 201 1) “Associates and joint ventures” (e ective 1 
January 2013)
 > IFRIC 20 “Stripping costs in the production phase of a surface 
mine” (e ective 1 January 2013)
The Group is yet to assess the full impact of these new standards 
and amendments but does not expect them to have a material 
impact on the nancial statements.
2.2 Consolidation
(a) Subsidiaries
The consolidated nancial statements include the nancial 
statements of the Company and its subsidiaries. Subsidiaries are 
all entities in which the Group directly or indirectly owns more 
than 50 per cent of the voting stock or otherwise has the power to 
govern the nancial 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. Identi able 
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 re ect changes in consideration 
arising from contingent consideration amendments.
Cost also includes direct attributable costs of investment. 28
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
2. Summary of signi cant accounting policies continued
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 identi able net assets 
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 di erence 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 nancial statements in accordance with IFRSs 
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 nancial statements are based on 
these statutory accounting records, appropriately adjusted and 
reclassi ed 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 de ned as components of the Group 
where separate nancial 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 nancial performance using the 
information provided.
The CODM receives monthly IFRS based nancial information for 
the Group and its development and production entities. There were 
three development and production entities during both 201 1 and 
2012. Management has determined that the operations of these 
production and development entities are su ciently homogenous 
(all 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 o ce or in a corporate capacity or as holding 
companies. Management has concluded that due to application 
of the aggregation criteria that separate nancial 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 nancial 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 nancial 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 rouble 
(“RUR”). It is the Management’s view that the RUR best re ects 
the nancial results of its Cyprus subsidiaries because they are 
dependent 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 di erences on non-monetary nancial 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 nancial position of all the Group entities (none of 
which has the currency of a hyper-in ationary economy) that have 
a functional currency di erent from the presentation currency are 
translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are 
translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated 
at average exchange rates (unless this average is not a 
reasonable approximation of the cumulative e ect 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
(iii) all resulting exchange di erences are recognised in other 
comprehensive income.
The major exchange rates used for the revaluation of the closing 
balance sheet at 31 December 2012 were
 > GBP 1.6242: US$ (201 1: GBP 1: US$1.5453)
 > EUR 1.3215: US$ (201 1: not applicable)
 > US$1:30.558 RUR. (201 1: US$1: RUR. 32.196) VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
29
2. Summary of signi cant accounting policies continued
2.5 Oil and gas exploration assets
The Company and its subsidiaries apply the successful e orts 
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 eld-by- eld basis. 
Costs directly associated with an exploration well, including 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 nancial statements according to the 
nature of the expenditure and the stage of development of the 
associated eld, 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 speci c eld, it is transferred to 
producing assets as part of property, plant 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 eld by eld basis and represent the cost of developing the 
commercial reserves discovered and bringing them into production 
together with E E expenditures incurred in nding 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, nance costs capitalised and the cost of 
recognising provisions for future restoration and decommissioning.
Where major and identi able parts of the production assets have 
di erent 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 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 eld storage tank.
(d) Impairment – exploration and evaluation assets
Exploration and evaluation assets are tested for impairment prior 
to reclassi cation 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 elds 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 eld, except that a number of eld interests 
may be grouped together where the cash ows of each eld are 
interdependent, for instance where surface infrastructure is used 
by one or more eld 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 eld. 
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 ow or the 
current estimate of the discount rate used are re ected as an 
adjustment to the provision and the property, plant and equipment. 
The unwinding of the discount is recognised as a nance 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.
 and is not depreciated. Depreciation of other assets is calculated 
on a straight line basis as follows:
Machinery and equipment 6–10 years
O ce equipment in excess of US$5,000 3–4 years
Vehicles and other 2–7 years 30
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
2. Summary of signi cant accounting policies continued
2.7 Financial assets
The Group classi es its nancial assets in the following categories:
(a) Financial assets at fair value through pro t or loss
Financial assets at fair value through pro t or loss are nancial 
assets held for trading. This category comprises derivatives unless 
they are e ective hedging instruments. The Group had no nancial 
assets in this class as at 31 December 2012 or 31 December 201 1.
(b) Loans and receivables
 oans and receivables are non-derivative nancial assets with xed 
or determinable payments that are not quoted in an active market. 
This category comprises trade and other receivables, term bank 
deposits and cash and cash equivalents in balance sheet.
2.8 Derivative nancial instruments
Derivative nancial assets and nancial liabilities are nancial 
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 pro t or loss.
2.9 Acquisitions, asset purchases and disposals
Acquisitions of oil and gas properties are accounted for under 
the purchase method where the target meets the de nition of a 
business combination.
Transactions involving the purchases of an individual eld interest, 
or a group of eld interests, that do not qualify as a business 
combination are treated as asset purchases, irrespective of whether 
the speci c transactions involved the transfer of the eld 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 
speci c 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 of production 
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 e ective 
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 di erence between the asset’s 
carrying amount and the present value of estimated future cash 
 ows, discounted at the original e ective 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 classi ed as e uity.
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 e ective 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 end of the reporting 
period in the countries where the Company’s subsidiaries 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 di erences arising between the tax bases of assets and 
liabilities and their carrying amounts in the consolidated nancial 
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 a ects neither accounting nor taxable pro t 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.
Deferred income tax assets are recognised to the extent that it is 
probable that future taxable pro t will be available against which 
the temporary di erences can be utilised.
Deferred income tax assets and liabilities are o set when there 
is a legally enforceable right to o set 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 di erent taxable 
entities where there is an intention to settle the balances on a net 
basis. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
31
2. Summary of signi cant accounting policies continued
2.16 Employee bene ts
(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, pro tability 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 di ers 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. In 201 1 and 2012 , the Group’s revenue 
related to sales of crude oil and condensate collected directly by 
customers and gas sales made at the entry to the gas distribution 
system.
(b) Interest income
Interest income is recognised on a time-proportion basis using the 
e ective interest method.
2.18 Prepayments
Prepayments are carried at cost less provision for impairment. A 
prepayment is classi ed 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 classi ed 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 bene ts associated with the asset 
will ow to the Group. Other prepayments are written o to pro t 
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 pro t 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 out ow 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 out ow 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 out ow 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 re ects current market assessments of the time value of 
money and the risks speci c to the obligation. The increase in the 
provision due to passage of time is recognised as interest expense.
2.20 Business combinations
Business combinations are accounted for using the acquisition 
method. The cost of an acquisition is measured as the fair value 
of the assets acquired, equity instruments issued and liabilities 
incurred or assumed at the date of completion of the acquisition. 
Acquisition costs incurred are expensed and included in 
administrative expenses. Identi able assets acquired and liabilities 
and contingent liabilities assumed in a business combination are 
measured initially at their fair values at the acquisition date. If 
there is excess of the cost of acquisition over the fair value of the 
acquired entity’s share of the identi able net assets acquired, then 
the excess is recorded as goodwill. If the cost of the acquisition 
is less than acquired entity’s share of the net assets required, the 
di erence is recognised directly in the statement of income.
3. Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of nancial risks: market 
risk (including foreign exchange risk, price risk, and cash ow 
interest rate risk), credit risk, and liquidity risk. The Group’s overall 
risk management programme focuses on the unpredictability of 
 nancial markets and seeks to minimise potential adverse e ects 
on the Group’s nancial 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. 32
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
3. Financial risk management continued
At 31 December 2012, if the US dollar had weakened/strengthened by 5% against the RUR with all other variables held constant, post-tax 
pro t for the year would have been US$40,000 (201 1: US$24,000) higher/lower, mainly as a result of foreign exchange gains/losses on 
translation of RUR denominated trade payables and nancial assets. At 31 December 2012, if the US dollar had weakened/strengthened 
by 5% against the Euro (“EUR”) with all other variables held constant, post-tax pro t for the year would have been US$197 ,000 (201 1: not 
applicable) higher/lower, mainly as a result of foreign exchange gains/losses on translation of EUR denominated interest charges and 
 nancial liabilities. At 31 December 2012, if the US dollar had weakened/strengthened by 5% against the Pound Sterling (“GBP”) with all 
other variables held constant, post-tax pro t for the year would have been US$5,000 (201 1: US$41,000) higher/lower, mainly as a result of 
foreign exchange gains/losses on translation of GBP denominated trade payables and nancial assets.
The following table shows the currency structure of nancial assets and liabilities:
At 31 December 2012
Rubles 
US$ 000
US Dollars 
US$ 000
Euros 
US$ 000
Sterling 
US$ 000
Total 
US$ 000
Financial assets
Cash and cash equivalents 2,790 4,166 25 69 7,049
Total nancial assets 2,790 4,166 25 69 7,049
Financial liabilities (before provision for UK taxes)
4,068 3,987 4,002 11 12,068
At 31 December 2011
Rubles 
US$ 000
US Dollars 
US$ 000
Euros 
US$ 000
Sterling 
US$ 000
Total 
US$ 000
Financial assets
Cash and cash equivalents 6,987 2,644 – 468 10,099
Total nancial assets 6,987 2,644 – 468 10,099
Financial liabilities (before provision for UK taxes)
6,521 83 – 10 6,614
No foreign exchange forward contracts were used in 2012 or 201 1.
(ii) Price risk
The Group is not exposed to price risk as it does not hold nancial instruments of which the fair values or future cash ows will be a ected 
by changes in market prices.
(iii) Cash ow and fair value interest rate risk
As the Group has no signi cant interest-bearing assets and liabilities, the Group’s income and operating cash ows 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$7 ,049,000 and 
US$10,099,000 at 31 December 2012 and 201 1 respectively.
The Group’s principal nancial asset is cash and credit risk arises from cash and cash equivalents and deposits with banks and nancial 
institutions. It is the Group’s policy to monitor the nancial standing of these assets on an ongoing basis. Bank balances are held with 
reputable and established nancial 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 nancial institution (S P)
31 December 
2012
31 December 
2011
A 1,147 2,795
BBB 5,296 563
BBB– 517 6,387
Other 89 354
Total bank balance
7,049 10,099 VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
33
3. Financial risk management continued
(c) Liquidity risk
Cash ow forecasting is performed by Group nance. Group nance 
monitors rolling forecasts of the Group’s liquidity requirements to 
ensure it has su cient cash to meet operational needs. The Group 
believes it has at least su cient liquidity headroom to fund its 
currently planned exploration and development activities.
The Group expects to fund its exploration and development 
programme, as well as its administrative and operating expenses, 
through 2012 using a combination of existing working capital, 
medium term bank borrowings 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 signi cantly a ected. The Group may need to raise additional 
equity or debt nance as appropriate to fund investments beyond 
its current commitments.
3.2 Fair value estimation
E ective 1 January 2009, the Group adopted the amendment 
to IFRS 7 for nancial 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:
 > uoted 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 nancial assets and liabilities that are required to 
be measured at fair value.
4. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. 
The resulting accounting estimates will, by de nition, seldom equal 
the related actual results. The estimates and assumptions that have 
a signi cant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next nancial year are 
discussed below.
(a) Carrying value of xed assets, intangible assets and 
impairment
Fixed assets are assessed for impairment when events and 
circumstances indicate that an impairment condition may exist. The 
carrying value of xed 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 ows expected to be generated from the 
asset. In identifying cash ows management rstly determine the 
cash generating unit or group of assets that give rise to the cash 
 ows. The cash generating unit is the lowest level of asset at which 
independent cash ows can be generated.
The estimation of forecast cash ows involves the application of 
a number of signi cant judgements and estimates to a number 
of variables including production volumes, commodity prices, 
operating costs, capital investment, hydrocarbon reserves 
estimates, in ation and discount rates. For the purposes of 
impairment testing, the discount rate used is 15% per annum. 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 signi cant and are not predictable with 
any degree of certainty. Management considers the estimation of 
reserves to represent a signi cant judgement in the context of the 
 nancial 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 signi cant 
impairment of oil and gas assets where revisions (positive or 
negative) can have a signi cant e ect on depreciation rates from 
period to period. Management have considered the sensitivity of 
this key assumption and in order for an impairment issue to present 
itself to the Group, reserve estimates would need to reduce by 
more than 25%.
(c) Income taxes
Signi cant judgement is frequently required in estimating 
provisions for deferred taxes. This process involves an assessment 
of temporary di erences resulting from di ering treatment of 
items for tax and accounting purposes. These di erences result 
in deferred tax assets and liabilities, which are included within the 
balance sheet.
(d) Business combination – acquisition of LLC Gazneftedobycha
In April 201 1, the Group purchased 100% of the share capital of 
 C Gazneftedobycha (“GND”). IFRS 3 requires that, at the date 
of acquisition, all assets and liabilities, including intangible assets, 
of an acquired entity be recorded at their respective fair values. 
The estimation of fair values requires signi cant management 
judgement. To assess fair values of monetary assets and liabilities, 
management used all information available to determine whether 
an asset is recoverable or whether it is probable that an event 
will result in out ows of resources from the Group, including 
assessment of such factors as the current overall economic 
conditions, speci c customer, counterparty or industry conditions 
and the current overall legal environment. Changes in any of these 
conditions may result in adjustments to fair values of monetary 
assets and liabilities recorded by the Group. Management engaged 
independent experts to advise as to the fair values of acquired 
property, plant and equipment. Acquisition accounting has been 
 nalised in 2012 with no material revisions other than for the 
recognition of US$2.7 million of deferred tax which has been added 
to licence acquisition costs. However, future changes in any of the 
estimates may result in losses in future periods. 34
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
4. Critical accounting estimates and judgements continued
The recognised amounts determined for the fair values of the assets acquired and liabilities assumed were as follows:
As at 1 April 2011 US$ 000
Property, plant and equipment 31,078
Intangible assets – licence acquisition costs 17,010
Other non-current assets 288
Cash and cash equivalents 554
Inventory 631
Trade and other receivables 520
Deferred tax liabilities (1,869)
Other current assets 17
Trade payables (946)
Other current liabilities (112)
Total identi able net assets acquired
47,171
There was no goodwill arising from the business combination based on the provisional accounting. As a part of the accounting for the 
business combination the excess amount of the consideration paid over the provisional net fair value of the other assets and liabilities 
acquired has been attributed to the fair value of the Dobrinskoye production licence, which is owned by GND.
The fair value of the consideration paid plus liabilities assumed in the acquisition of GND was:
US$ 000
Cash purchase of GND equity 1,082
Debt outstanding to Trans Nafta 24,440
GNS receivable (Note 12(b)) 21,649
Total
47,171
The fair value of trade and other receivables is US$520,000 and includes trade receivables with a fair value of less than US$100.
The revenue included in the consolidated income statement from 1 April 201 1 to 31 December 201 1 contributed by GND was $9,262,000. 
GND also contributed pro t of US$1,083,000 over the same period.
Had GND been consolidated from 1 January 201 1, the consolidated income statement for the year ended 31 December 201 1 would show 
revenue of US$13,035,000 and pro t of US$4,319,000.
Subsequent to the acquisition and between 28 April 201 1 and 31 December 201 1, GND made repayments to Trans Nafta totalling 
US$18,883,000. The remainder of the loans outstanding to Trans Nafta were repaid in full during the year ended 31 December 2012.
5. Cost of sales and administrative expenses – Group
Cost of sales and administrative expenses are as follows:
Year ended 31 December
2012 
US$ 000
2011 
US$ 000
Cost of sales 15,648 15,582
Exploration and evaluation expenses 8,475 200
Operating and administrative expenses 9,890 6,704
Write o of development assets 188 5,612
Total operating and administrative expenses
34,201 28,098 VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
35
5. Cost of sales and administrative expenses – Group continued
Total operating and administrative expenses are analysed as follows:
Year ended 31 December
2012 
US$ 000
2011 
US$ 000
Mineral extraction tax 8,951 9,537
Exploration and evaluation 8,475 200
Salaries and sta bene ts 3,025 2,485
Depreciation and amortisation 2,280 2,641
Directors’ emoluments and other bene ts 817 827
Field operating expenses 2,855 2,413
Audit fees 257 301
Taxes other than payroll and mineral extraction 1,000 896
 egal and consulting 994 1,050
Write o of development assets 188 5,612
Provision against VAT recovery 2,945 –
Fines and penalties 977 –
Other 1,437 2,136
Total
34,201 28,098
(a) Exploration and evaluation
The principal component of the 2012 exploration and evaluation expense is the impairment charge on the carrying value of intangible assets 
relating to the two unsuccessful exploration wells completed during 2012 . This includes licence acquisition costs as wells as the cost of 
seismic studies and costs of drilling and testing operations.
(b) Sta and salaries
The average monthly number of employees (including executive directors) employed by the Group was:
Year ended 31 December 2012 2011
Exploration and production 121 121
Administration and support 24 26
Total
145 147
Their aggregate remuneration (excluding executive directors) comprised:
Year ended 31 December
2012 
US$ 000
2011 
US$ 000
Wages and salaries 2,453 1857
Payroll taxes and social contribution 533 542
Sta bene ts 39 86
Total
3,025 2,485
The average monthly number of employees employed by the Company was:
Year ended 31 December 2012 2011
Administration and support
22
Only directors are employed by the Company.
(c) Directors’ emoluments and other bene ts
Details of directors’ emoluments and other bene ts for the years ended 31 December 2012 and 31 December 201 1 are provided in the 
Directors’ Remuneration Report. Included in directors’ emoluments were share grant expenses of US$nil (201 1: US$37 ,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. 36
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
5. Cost of sales and administrative expenses – Group continued
(e) Depreciation
Substantially all depreciation relates to oil and gas assets and is included within cost of sales.
(f) Provision for disputed VAT
During 2012, the Group paid a sum of US$2.9 million in settlement of a disputed VAT claim. Recovery of this is subject to a continuing court 
process in Russia. Management considers recovery of the sum to be likely and intends to pursue the recovery vigorously. However, it was 
considered prudent to make a provision against an unsuccessful outcome.
6. Finance income – Group
Finance income comprises interest earned during the period on cash balances with di erent nancial institutions (note 13). Interest expense 
relates to a two year amortising debt facility (note 18).
7. Other gains and losses – Group
Year ended 31 December
2012 
US$ 000
2011 
US$ 000
Foreign exchange loss (234) (1,341)
Other gains/(losses) 62 (469)
Total other gains and losses
(172) (1,810)
8. Current and deferred income tax – Group
Year ended 31 December 2012 2011
Current tax:
Current income tax ––
Adjustments to tax charge in respect of prior periods – –
Total current tax ––
Deferred tax:
Adjustments to tax charge in respect of prior periods (500) –
Origination and reversal of timing di erences (613) (18)
Total deferred tax (1,113) (18)
Total tax credit/(charge)
(1,113) (18)
The tax charge in the Group income statement di ers from the theoretical amount that would arise using the weighted average tax rate 
applicable to pro ts of the consolidated entities as follows:
Year ended 31 December
2012 
US$ 000
2011 
US$ 000
Pro t/(loss) before income tax and minority interest (6,308) (1,118)
Tax calculated at domestic tax rates applicable to (pro ts)/losses in the respective countries (1,322) 153
Tax e ect of items which are not deductible or assessable for taxation purposes:
Non-deductible expenses 982 (238)
Tax losses for which no deferred tax asset was recognised – (512)
Other tax adjustments (773) 579
Income tax charge
(1,113) (18)
The weighted average applicable tax rate was 19.6% (201 1: 19.6%). VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
37
8. Current and deferred income tax – Group continued
Deferred taxation is attributable to the temporary di erences that exist between the carrying amounts of assets and liabilities for nancial 
reporting purposes and the amounts used for tax purposes. The tax e ects of temporary di erences that give rise to deferred taxation are 
presented below:
31 December 
2012
Di erences 
recognition 
and reversal
31 December 
2011
Business 
combination
Di erences 
recognition 
and reversal
31 December 
2010
Tax e ects of taxable temporary di erences:
Exploration and production assets (6,488) (5,829) (659) – 39 (698)
Property, plant and equipment (2,466) (2,466) – – – –
Inventories (7) 5 (12) – 1 (13)
Total (8,961) (8,290) (671) – 40 (711)
Tax e ect of deductible temporary di erences:
Tax losses carry forward 10,590 4,874 5,716 831 (386) 5,271
Trade and other receivables 275 (48) 323 – (19) 342
Property, plant and equipment 158 (27) 185 – (11) 196
Share grant expenses – (7) 7 – – 7
Total 11,023 4,792 6,231 831 (416) 5,816
Net tax e ect of temporary di erences
2,062 (3,498) 5,560 831 (376) 5,105
Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax bene t through 
the future taxable pro ts is probable. Tax losses in respect of Cyprus and the UK do not expire. The Group has not recognised a deferred tax 
asset of $1,224k in respect of tax losses and other short-term timing di erences in the UK (201 1: $1,009k).
9. Basic and diluted loss per share – Group
Pro t per share is calculated by dividing the pro t 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 2012 2011
Net loss attributable to equity shareholders (per share) (0.08) (0.01)
Net loss attributable to equity shareholders (7,421) (1,136)
Basic weighted number of shares
81,017,800 81,017,800
10. Intangible assets – Group
Intangible assets represent exploration and evaluation assets such as licences, studies and exploratory drilling, which are stated at historical 
cost.
Work in 
progress: 
exploration 
and 
evaluation
Exploration 
and 
evaluation
Development 
and 
producing 
assets Total
At 1 January 2011 3,444 6,073 19,603 29,120
Additions 398 – 15,780 16,178
Impairments (99) – (2,193) (2,292)
Transfers (51) – 51 –
At 31 December 2011 3,692 6,073 33,241 43,006
Accumulated amortisation
At 1 January 2011 – – (155) (155)
Depreciation – – (631) (631)
At 31 December 2011 – – (786) (786)
Exchange adjustments (205) (324) (2,169) (2,698)
At 31 December 2011
3,487 5,749 30,286 39,522 38
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
10. Intangible assets – Group continued
Work in 
progress: 
exploration 
and 
evaluation
Exploration 
and 
evaluation
Development 
and 
producing 
assets Total
At 1 January 2012 3,487 5,749 31,072 40,308
Additions – 28 427 455
Impairments (33) (136) – (169)
Transfers (3,238) 3,238 – –
Transfers to PP E (31,499) (31,499)
At 31 December 2012 216 8,879 – 9,095
Exchange adjustments 134 417 – 551
At 31 December 2012
350 9,296 – 9,646
During 2012 the licence acquisition costs and other intangible assets associated with producing oil and gas elds were transferred to 
Property, plant and equipment (note 1 1) following management review of the performance of the Group’s elds in Cash Generating Units. 
As a result of this transfer all producing assets are allocated to the same nancial statement caption and are therefore consistent with how 
the results are monitored.
11. Property, plant and equipment – Group
Movements in property, plant and equipment, for the years ended 31 December 2012 and 201 1 are as follows:
Cost
Development 
assets
Work in 
progress
Land and 
buildings
Producing 
assets Other Total
At 1 January 2011 25,563 440 1,070 12,277 146 39,496
Additions 2,591 5,202 126 30,259 674 38,852
Write o s (5,789) (456) – (275) (78) (6,598)
Transfers (660) – – 577 83 –
At 31 December 2011 21,705 5,186 1,196 42,838 825 71,750
Accumulated depreciation
At 1 January 2011 – – – (1,942) (61) (2,003)
Depreciation – – – (4,225) (382) (4,607)
Disposals – – – 20 52 72
At 31 December 2011 – – – (6,147) (391) (6,538)
Exchange adjustments (1,030) (436) (68) (2,849) (35) (4,418)
At 31 December 2011
20,675 4,750 1,128 33,842 399 60,794
Cost
Development 
assets
Work in 
progress
Land and 
buildings
Producing 
assets Other Total
At 1 January 2012 20,675 4,750 1,128 39,989 790 67,332
Additions 10,236 3,643 65 3,574 – 17,518
Impairments – (7,314) – – – (7,314)
Disposals (144) (984) – (238) (18) (1,384)
Transfers (18,051) (367) – 18,404 14 –
Transferred from Intangible assets – – – 31,499 – 31,499
At 31 December 2012 12,716 (272) 1,193 93,228 786 107,651
Accumulated depreciation
At 1 January 2012 – – – (6,147) (391) (6,538)
Transferred from Intangible assets – – – (786) – (786)
Depreciation – – – (2,188) (113) (2,301)
Disposals – – – 107 16 123
At 31 December 2012 – – – (9,014) (488) (9,502)
Exchange adjustments 1,057 169 69 4,237 22 5,554
At 31 December 2012
13,773 (103) 1,262 88,451 320 103,703 VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
39
12. Non-current assets – Group
As at 31 December
2012 
US$ 000
2011 
US$ 000
VAT recoverable 714 1,779
Other non-current assets 82 76
Total other non-current assets
796 1,855
Management believes that it may not be able to recover all VAT speci c to licence and exploration and evaluation contractors’ payments 
within the 12 months of the balance sheet date. Therefore this VAT is classi ed as a non-current asset.
13. Term deposits, cash and cash equivalents – Group and Company
Group Company
At 31 December
2012 
US$ 000
2011 
US$ 000
2012 
US$ 000
2011 
US$ 000
Cash at bank and on hand 4,484 4,509 1,017 2,614
Short-term bank deposits 2,565 5,590 – –
Total cash and cash equivalents
7,049 10,099 1,017 2,614
An analysis of Group deposits, cash and cash equivalents by bank and currency is presented in the table below:
Group Company
At 31 December 
Bank Currency
2012 
US$ 000
2011 
US$ 000
2012 
US$ 000
2011 
US$ 000
United Kingdom
Barclays Bank P C USD 1,078 2,327 949 2,146
Barclays Bank P C GBP 69 468 69 468
Russian Federation
Transcredit Bank RUR 71 6,387 – –
Unicreditbank RUR 234 246 – –
Unicreditbank USD 283 317 – –
 AO Rai eisenbank RUR 2,466–––
 AO Rai eisenbank USD 2,805 – – –
 AO Raieisenbank EUR 25–––
Other banks and cash on hand RUR 19 354 – –
Total cash and cash equivalents
7,049 10,099 1,017 2,614
14. Inventories – Group
At 31 December
2012 
US$ 000
2011 
US$ 000
Production and other spares 1,124 1,643
Crude oil inventory 111 208
Total inventories
1,235 1,851
15. Other receivables – Group
At 31 December
2012 
US$ 000
2011 
US$ 000
VAT receivable 697 95
Prepayments 1,520 2,108
Other accounts receivable 113 206
Total other receivables
2,330 2,409
Prepayments are to contractors relate to initial advances made in respect of drilling, construction and other projects. 40
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
16. Share capital and share premium – Group
The following summarises the movement in the share capital and share premium of the Company for the years ended 2010 and 201 1.
Number of 
shares
Share 
capital 
US$ 000
Share 
premium 
US$ 000
At 1 January 2011 81,017,800 1,485 165,873
Issues of shares –––
At 31 December 2011 81,017,800 1,485 165,873
At 1 January 2012 81,017,800 1,485 165,873
Issues of shares –– –
At 31 December 2012
81,017,800 1,485 165,873
The total number of authorised ordinary shares is 330,720, 100 (2010: 330,720, 100) with a par value of £0.01 per share (2010: £0.01 per share).
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 2012 (201 1: nil).
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, 201 1 and 2012 and will remain outstanding until May 2017 . In January 2009, the Company granted 
568,732 share options to Tony Alves under the ESOP . The options vest in 8 semi-annual tranches over a period of 4 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 2012 options over 379,154 shares (201 1: 432,47 4 shares) were eligible for vesting. There were no share grant expenses in 2012 
(201 1: US$37 ,000).
The fair value of share options granted and of restricted shares issued is measured by use of the Black-Scholes pricing model with the 
following assumptions:
Year ended 31 December 2012
2009 Executive Share 
Option Plan
Share price 97 .0p
Exercise price 100.0p–405.0p
Expected volatility 35.3%
Expected life 0–3 years
Risk free rate 2.5%
Expected dividends None
17. Other reserves – Group
At 31 December
2012 
US$ 000
2011 
US$ 000
Currency translation adjustment (18,852) (25,529)
Share grant expense 5,233 5,233
Total other reserves
(13,619) (20,296)
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. Debt – Group
On 26 March 2012, the Group entered into a loan agreement to provide up to US$10 million by way of a two year amortising credit facility. 
Under the facility, the amounts outstanding are amortised over 19 monthly instalments commencing October 2012. The maturity period of 
the nancial liabilities under this facility is disclosed in note 19 below. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
41
19. Trade and other payables – Group
At 31 December
2012 
US$ 000
2011 
US$ 000
Trade payables 771 416
Taxes other than pro t tax 1,864 1,553
Customer advances 1,448 466
 oans due to Trans Nafta – 4,179
Total
4,083 6,614
In April 201 1, the Group purchased 100% of the share capital of C Gazneftedobycha (“GND”). At the date of the acquisition, GND had loans 
outstanding due to its former parent, Trans Nafta. The nal balances were repaid in April 2012.
The maturity period of the Group’s nancial liabilities, comprising only trade and other payables at 31 December 2012 and 201 1 is as follows:
Maturity period at 31 December 2012
0 to 3 
months
3 to 12 
months
Over 
1 year Total
Trade and other payables 4,058 25 – 4,083
Bank debt
1,600 4,803 1,586 7,989
Maturity period at 31 December 2011
0 to 3 
months
3 to 12 
months
Over 
1 year Total
Trade and other payables 2,435 4,179 – 6,614
Bank debt
––––
20. Investments – Company
Investments in subsidiaries, comprising solely ordinary share capital, are accounted for at cost. The Company’s subsidiaries are as follows:
Name Jurisdiction Nature of Operations % Owned From
Woodhurst Holdings td. Cyprus Intermediate Holding Company 100% October 2005
Pre-Caspian Gas Company Russia Oil and gas exploration and production 100% May 2006
Gaznefteservice Russia Oil and gas exploration and production 100% September 2006
Shropak Investments td Cyprus Dormant 100% June 2007
Volga Gas (Cyprus) td. Cyprus Intermediate Holding Company 100% August 2007
Gazservice Russia Special purpose entity 99% October 2008
 AO Gamma Russia Joint operating company 75% January 2009
Volga Gas Finance td. 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 AO 
Gazservice. Subsequently, Pre-Caspian Gas Company sold an unimproved plot of land to AO Gazservice at cost basis.
Company
31 December 
2011 
US$ 000
Additions 
US$ 000
Disposals 
US$ 000
31 December 
2012 
US$ 000
Investments in Woodhurst Holdings 150,683 0 – 150,683
Investments in Volga Gas (Cyprus) 1,451 100 – 1,551
Total investments
152,134 100 0 152,234
The Company funds its activities in the Russian Federation via Woodhurst Holdings, the Company’s Cyprus registered subsidiary. 42
Financial Statements
Notes to the IFRS Consolidated Financial Statements
continued
21. Accumulated loss – Group and Company
Group Company
At 31 December
2012 
US$ 000
2011 
US$ 000
2012 
US$ 000
2011 
US$ 000
Retained losses (31,916) (30,780) (3,272) (1,840)
 oss for the year (7,421) (1,136) (1,338) (1,432)
Accumulated loss 31 December
(39,337) (31,916) (4,610) (3,272)
22. 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
2012 
US$ 000
2011 
US$ 000
Fees payable to Company’s auditor for the audit of parent Company and consolidated nancial statements 215 225
Fees payable to the Company’s auditor and its associated rms for other services:
– The audit of Company’s subsidiaries pursuant to legislation 27 76
– Other services pursuant to legislation 153 99
– Tax services ––
Total
396 400
23. 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:
Year ended 31 December
Related party Relationship Nature of transactions 2012 2011
Baring Vostok Cyprus imited A liated with controlling shareholder Rent, services 137 145
Baring Vostok Holding imited A liated with controlling shareholder Travel expenses 6 3
Granitie Consulting imited A liated with controlling shareholder Consultancy services
46 –
Year-end balances arising from transactions with related parties
31 December 
2012 
US$ 000
31 December 
2011 
US$ 000
Due to related parties
Baring Vostok (Cyprus) imited
12 13
All transactions with related parties were made on commercial basis.
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.
24. Contingencies and Commitments
24.1 Capital commitments
Pre-Caspian Licence Area
In accordance with the licence agreement for the Pre-Caspian licence area, PGK was required to commence drilling one additional well 
before 31 December 2013. There are currently no plans for drilling in the block.
As of the balance sheet date all other licence commitments have been met. VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
43
24. Contingencies and Commitments continued
24.2 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, signi cant 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 2012, management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax, currency 
and customs positions will be sustained.
24.3 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 signi cant liabilities in addition to 
amounts which are already accrued and which would have a material adverse e ect on the nancial position of the Group.
24.4 Oil eld licences
The Group is subject to periodic reviews of its activities by governmental authorities with respect to the requirements of its oil eld licences. 
Management of the Group correspond with governmental authorities to agree on remedial actions, if necessary, to resolve any ndings 
resulting from these reviews. Failure to comply with the terms of a licence could result in nes, 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 e ect on the nancial position or the operating results of the Group.
In January 2008 the Group was issued with an amendment to its Karpenskiy icence Agreement. The amendments to the K A 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
Dobrinskoye OOO Gazneftedobycha 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 o cial warnings or noti cations about continuous non-compliance or any risk of suspension, restriction or 
termination.  44
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 ondon o ce 
of Akin Gump Strauss Hauer  Feld at Ten Bishops Square, ondon 
E1 6EG on 7 June 2013 at 10.00 a.m. for the following purposes:
Ordinary Resolutions
1. To receive and adopt the Company’s accounts for the year ended 
31 December 2012 and the directors’ report.
2. To reappoint Mikhail Ivanov, who retires by rotation, as a director.
3. To reappoint Aleksey Kalinin, who retires by rotation, as a 
director.
4. To reappoint Vladimir Koshcheev, who retires by rotation, as a 
director.
5. To appoint KPMG Audit Plc as auditors of the Company until the 
conclusion of the next general meeting at which accounts are 
laid before the Company.
6. To authorise the directors to determine the remuneration of the 
auditors of the Company.
7 . That the directors be and they are hereby generally and 
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) fteen months from 
the passing of this resolution, or (ii) the conclusion of the AGM 
of the Company to be held in 2014 (unless renewed, varied or 
revoked by the Company prior to or on such date), save that this 
authority shall allow the Company to make o ers 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 o er 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.
Special Resolutions
8. That the directors be and they are hereby empowered pursuant 
to Sections 570 and 573 of the Companies Act 2006 (the “Act”) 
to allot equity securities (as de ned 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:
(a) the allotment of equity securities in connection with a rights 
issue, open o er or other o er 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 
(b) the allotment (otherwise than pursuant to sub-paragraph (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 o ers 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 o er or agreement as if 
the power conferred hereby had not expired. 
9. That, the articles of association, produced to the meeting and 
initialled by the Chairman for the purposes of identi cation, shall 
be approved and adopted by the Company in substitution for, 
and to the exclusion of, the existing articles of association.
Registered O ce: BY ORDER OF THE BOARD
Ground Floor Antonio Maria Alves
17-19 Rochester Row Company Secretary
 ondon 19 April 2013
SW1P 1 T VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
45
Notes 1. Resolutions 1-7 are ordinary resolutions. For these resolutions to 
be passed, a simple majority of the votes cast at the Company’s 
AGM must be in favour of the resolutions. Resolutions 8 and 9 
are special resolutions. For these resolutions to be passed, at 
least three-quarters of the votes cast at the AGM must be in 
favour of the resolution. 
2. Amendment of Company’s articles of association (Resolution 9).
 The purpose of this resolution 9 is to enable the use by the 
Company’s registrar, Capita Registrars imited, of an electronic 
seal or electronic signatures on share certi cates as opposed 
to an embossed seal, which would be more cost e ective. The 
Company’s current articles of association do not provide for the 
use of an electronic seal or electronic signatures. Resolution 9 
will therefore propose the adoption of new articles of 
association in substitution of the existing articles of association 
to explicitly allow for the use of an electronic seal or electronic 
signatures via amendments to Articles 6.1, 36.1 and 36.2 of the 
articles of association. The following documents will be available 
for inspection during business hours at the registered o ce until 
the date of the meeting and on the day of the meeting itself:
 the current articles of association; and
 the proposed new articles of association. 
3. Only those members entered on the register of members of the 
Company at 6.00 p.m. on 5 June 2013 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 5 June 2013 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. 
4. A member entitled to attend, speak and vote at the meeting 
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.
5. A form of proxy is enclosed. To be e ective, it must be deposited at 
the o ce of the Company’s registrars (Capita Registrars, The Proxy 
Department, The Registry, 34 Beckenham Road, Beckenham, Kent 
BR3 4TU) 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.
6. To change your proxy instructions simply submit a new proxy 
appointment using the methods set out in Notes 2 and 3 above. 
Note that the cut-o 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-o 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. 
7 . In order to revoke a proxy instruction you will need to inform the 
Company using one of the following methods:
(a) by sending a signed hard copy notice clearly stating your 
intention to revoke your proxy appointment to the Company’s 
registered o ce 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 o cer 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 certi cated copy of such power of 
authority) must be included with the revocation notice; or 
(b) by sending an email to info volgagas.com.
In either case, the revocation notice must be received by the Company’s 
registrars no later than the cut-o time set out in Note 3 above.
8. The register of interests of the directors and their families 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 
o ce of the Company during normal business hours (Saturdays 
and public holidays excepted) from the date of this notice until 
the conclusion of the AGM.
9. To appoint a proxy or to give or amend an instruction to a 
previously appointed proxy via the CREST system, the CREST 
message must be received by the issuer’s agent RA10 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 Uncerti cated 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.
10. Any corporation which is a member can appoint one or more 
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. 
1 1.  Under section 319A of the 2006 Act, the Company must cause to 
be answered any question relating to the business being dealt 
with at the Annual General Meeting put by a member attending 
the meeting unless answering the question would interfere 
unduly with the preparation for the meeting or involve the 
disclosure of con dential information, or the answer has already 
been given on a website in the form of an answer to a question, 
or it is undesirable in the interests of the Company or the good 
order of the meeting that the question be answered. 
 Members who have any queries about the Annual General 
Meeting should contact the Company Secretary by email on 
info volgagas.com. Members may not use any electronic 
address or fax number provided in this notice or in any related 
documents (including the Form of Proxy) to communicate with 
the Company for any purpose other than those expressly stated.
12.  Information regarding the Annual General Meeting, including 
information required by section 31 1A of the 2006 Act, and a 
copy of this notice of Annual General Meeting is available from 
www. volgagas.com.  46
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
 eld 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, speci ed 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 speci ed 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 speci ed in the 
subsoil licence. A licence area may contain one or more elds or may encompass only a portion of a eld
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
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 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 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 VOLGA GAS PLC
ANNUAL REPORT AND ACCOUNTS 2012
BUSINESS OVERVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
47
proved reserves include reserves that are con rmed 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 per cent chance of being produced
proved plus probable 
reserves
sum of the proved reserves and the probable reserves calculated in accordance with SPE standards
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 con ned 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 su cient 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 de nitions 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 48
Notes Registered O ce
Ground Floor, 17-19 Rochester Row
London SW1P 1QT
United Kingdom
Company Secretary
Tony Alves
of the registered o ce
Nominated Adviser and Joint Broker
Oriel Securities Limited
150 Cheapside
London EC2V 6ET
United Kingdom
Auditors
KPMG Audit plc
8 Salisbury Square
London EC4Y 8BB
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
Geneva House, 7 Petrovka Street
Moscow 107031
Russian Federation
Registrar
Capita Registrars
The Registry
34 Beckenham Road, Beckenham
Kent BR3 4TU
United Kingdom
Corporate Communications/PR
FTI Consulting
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