On April 26, 2018, Gazprom published its audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for the year that ended on December 31, 2017.

Total sales (net of excise tax, VAT, and customs duties) increased by RUB435,092 million, or seven percent, to RUB6,546,143 million for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The increase in sales was mainly driven by an increase in sales of refined products and crude oil.

Net sales of gas increased by RUB37,817 million, or one percent, to RUB3,340,587 million for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The change was due to the increase in the volumes of gas sold in all geographic segments and the growth in average U.S. dollar prices (including excise tax and customs duties) in the former Soviet Union countries and Europe and other countries, which was partially offset by the appreciation of the average exchange rate of the Russian ruble against the U.S. dollar and the euro by 13 percent and 11 percent, respectively.

Net sales of gas to Europe and other countries increased by RUB81,190 million, or four percent, to RUB2,221,217 million for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The change is attributable to the increase in volumes of gas sold by six percent, or 13.7 billion cubic meters (bcm), that was partially compensated by a one-percent decrease in average Russian ruble prices (including excise tax and customs duties).

Net sales of gas to former Soviet Union countries decreased by RUB16,867 million, or five percent, to RUB292,777 million for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The change was due to the decrease in average Russian ruble prices (including customs duties) by 10 percent that was partially compensated by the increase in volumes of gas sold by five percent, or 1.8 bcm.

Net sales of gas within Russia increased by RUB55,761 million, or seven percent, to RUB875,685 million for the year that ended on December 31, 2017. This change is mainly explained by the increase in volumes of gas sold by seven percent, or 15.0 bcm.

Net sales of refined products increased by RUB189,528 million, or 13 percent, to RUB1,687,090 million. The increase in sales of refined products was due to an increase in average prices.

Net sales of crude oil and gas condensate increased by RUB128,000 million, or 31 percent, to RUB539,958 million for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The increase in sales of crude oil was mainly due to an increase in volumes of crude oil sold by the Gazprom Neft Group to customers in Europe and other countries and also to an increase in average prices in all geographic segments.

Operating expenses increased by RUB469,107 million, or nine percent, to RUB5,714,090 million for the year that ended on December 31, 2017 compared to the prior year.

The change in operating expenses is attributable to an increase in taxes, other than income taxes, which rose by RUB345,662 million, or 38 percent for the year that ended on December 31, 2017 compared to the year that ended on December 31, 2016. The augmentation is due to an increase in the mineral extraction tax by RUB301,566 million, or 49 percent.

New natural gas and crude oil extraction tax formulas were introduced on January 1, 2017 in Russia.

Profits to be allocated to the shareholders of Gazprom for the year that ended on December 31, 2017 amounted to RUB714,302 million, which is RUB237,335 million, or 25 percent, less than for the year that ended on December 31, 2016.

The net debt balance (defined as the sum of short-term borrowings, current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings, long-term promissory notes payable, net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) increased by RUB464,616 million, or 24 percent, from RUB1,932,895 million as of December 31, 2016 to RUB2,397,511 million as of December 31, 2017. This increase was due to an increase in long-term borrowing.