OJSC Oil Company Rosneft Consolidated Financial Statements

OJSC Oil Company Rosneft
Notes to Consolidated Financial Statements (continued)
10. Long-Term Investments (continued)
OJSC TGK-11, OJSC Kubanenergo
The Company acquired interests in OJSC Tomskenergo, OJSC Kubanenergo through the auctions for
the sale of the assets of Yukos Oil Company that were held in May and July 2007(see Note 3). In
2007, OJSC Tomskenergo was merged into OJSC TGK-11. Following the conversion of
OJSC Tomskenergo's shares as a result of the above merger, the Company's interest in the share
capital of OJSC TGK-11 amounted to 5.28%. As of December 31, 2007 and 2008 this investment was
accounted for as an available for sale security. In December 2008, an arbitration court ruled in favor of
the Company to nullify reorganization and the conversion of Tomskenergo's shares. This decision
came into effect, however the defendant appealed to the court and hearings are scheduled on
March 11, 2009.
CJSC Vlakra
CJSC Vlakra has the right to use a land plot and office premises located in Moscow.
Other Investments
Other investments primarily comprise investments in shares of electric power generation,
transmission, distribution and maintenance companies located in the Tomsk region and in the south of
Russia, that are recognized in the accounting records of the entities acquired in 2007 through the
bankruptcy auctions of Yukos Oil Company's assets (see Note 3).
11. Property, Plant and Equipment, Net
December 31,
2008
Cost Accumulated depreciation Net carrying amount
December 31, December 31, December 31, December 31,
2007 2008 2007 2008
December 31,
2007
Exploration and
production 54,876 48,416 (11,163) (8,437) 43,713 39,979
Refining, marketing
and distribution 12,777 12,906 (3,300) (2,372) 9,477 10,534
Other activities 2,510 1,512 (496) (322) 2,014 1,190
Total property, plant
and equipment 70,163 62,834 (14,959) (11,131) 55,204 51,703
Exploration and production assets include costs to acquire unproved properties in the amount of
US$ 4,149 million as of December 31, 2008, and US$ 4,165 million as of December 31, 2007. The
Company plans to explore and develop the respective properties. The Company's management
believes these costs are recoverable.
The Company used reserve data (see supplementary oil and gas disclosure) to calculate depreciation,
depletion and amortization relating to oil and gas properties for 2008 and 2007 and for the assessment
of impairment of oil and gas assets.
As described in the "Depreciation, Depletion and Amortization" section of Note 2, the Company
calculates depletion using the unit-of-production method over proved or proved developed oil and gas
reserves depending on the nature of the costs involved. The proved or proved developed reserves used
in the unit of production method assume the extension of the Company’s production licences beyond
their current expiration dates until the end of the economic lives of the fields as discussed below in
further detail.
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