With independent auditor’s report

Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale
if their carrying amounts will be recovered principally through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group
is available for immediate sale in its present condition.
Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.

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JSC “Uzbekneftegaz”
Consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
18
3. 
Significant accounting policies (continued)
Non-current assets held for sale and discontinued operations (continued)
In the consolidated statements of profit or loss of the reporting period, and of the comparable period of the
previous year, income and expenses from discontinued operations are reported separately from income and
expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a
non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported
separately in the consolidated statement of profit or loss.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or
amortized.
Asset retirement (decommissioning) obligations
The Group has asset retirement (decommissioning) obligations (ARO) associated with its core business activities.
The Group’s exploration, development and production activities involve the use of wells, related equipment
and operating sites, oil gathering and treatment facilities, tank farms and in-field pipelines. Generally, licenses
and other regulatory acts require that such assets be decommissioned upon the completion of production.
According to these requirements, the Group is obliged to decommission wells, dismantle equipment, restore
the sites and perform other related activities. The Group’s estimates of these obligations are based on current
regulatory or license requirements, as well as actual dismantling and other related costs. These liabilities are
measured by the Group using the present value of the estimated future costs of decommissioning of these
assets. The discount rate is reviewed at each reporting date and reflects current market assessments of the
time value of money and the risks specific to the liability.
In accordance with “IFRIC” Interpretation 1
Changes in Existing Decommissioning, Restoration and Similar
Liabilities
, the provision is reviewed at each balance sheet date as follows:

Upon changes in the estimates of future cash flows (e.g., the costs of and timeframe for abandoning
one well) or the discount rate, changes in the amount of the liability are included in the cost of the item
of property, plant, and equipment, whereby such cost may not be negative and may not exceed the
recoverable value of the item of property, plant, and equipment;

Any changes in the liability due to its nearing maturity (change in the discount) are recognized in Finance
expenses.
The Group’s refining and distribution activities involve refining operations, and other distribution terminals, and
retail sales. The Group’s refining operations consist of major petrochemical operations and industrial
complexes. Legal or contractual asset retirement (decommissioning) obligations related to petrochemical, oil
refining and distribution activities are not recognized due to the limited history of such activities in these
segments, the lack of clear legal requirements as to the recognition of obligations, as well as the fact that
decommissioning periods for such assets are not determinable.
Because of the reasons described above, the fair value of an asset retirement (decommissioning) obligation
in the refining and distribution segment cannot be reasonably estimated.
Due to continuous changes in the regulatory and legal environment in Uzbekistan, there could be future
changes to the requirements and contingencies associated with the retirement of long-lived assets.