The Gazprom Headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Alexey Kuzmitsky, Governor of the Kamchatka Krai.

The parties discussed the prospects for the gasification and gas supply to the region as well as the progress in implementing the Accord on Gasification for the Kamchatka Krai. It was emphasized that Gazprom was currently finalizing the development of the General Scheme for the gasification and gas supply to the region.

Special attention was paid to the need to timely prepare the local consumers for gas supplies.

Alexey Miller and Alexey Kuzmitsky considered the issues of shaping the resource base for gas supply to the region. In this context, the meeting stressed the importance of rapid implementation of the Russian Federation Government resolution to award Gazprom the rights to use the subsurface resources of the Okhotsk Sea offshore Kamchatka.

Based on the meeting results Alexey Miller and Alexey Kuzmitsky entered into an Agreement of Cooperation between Gazprom and the Kamchatka Krai Government.

Signed for the first time ever, the document provides for coordinated cooperation between the parties in a whole range of activities. The top-priority ones are:

- review and implementation of projects for field exploration and development as well as hydrocarbon processing and transmission;

- execution of the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky investment project;

- gasification and gas supply to the Kamchatka Krai;

- production, transportation and utilization of the gas motor fuel;

- development and adoption of gas- and energy-saving technologies;

- improvement of the regional fuel and energy balance;

- creation of an integrated system of environmental monitoring.

According to the Agreement, the parties will promote an investment mechanism ensuring sustainable development of the gas supply system in the Kamchatka Krai and keep various financial sources optimally balanced.

The document stipulates Gazprom’s participation in the regional investment projects under the condition of their economic viability and solvent consumers’ gas demand.

The Government of the Kamchatka Oblast will give Gazprom the necessary assistance in securing a favorable investment environment for developing a gas supply system. This particularly involves creation of conditions for establishing market gas prices, taking into account the competition with other fuels and allocation of land plots for the construction of industrial facilities and social amenities.

At the same time, Gazprom will provide technical and environmental safety of the construction and operation of gas supply facilities in the Kamchatka Krai as well as reliable gas supply to the Krai’s consumers.

Background:

In September 2007 the Russian Federation Government adopted the decision prescribing Gazprom to get involved in the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project

As part of the project Gazprom is pre-developing the Kshukskoye and Nizhne-Kvakchinskoye fields on the western coast of the Kamchatka Peninsula and is constructing the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline projected for commissioning in 2010. The project also stipulates developing gas distribution networks in Petropavlovsk-Kamchatsky.

The total length of the Sobolevo – Petropavlovsk-Kamchatsky pipeline is to amount to 398 km, of which around 150 km of pipes have been welded and trenched. Preparation activities are underway to launch production drilling in the Kshukskoye and Nizhne-Kvakchinskoye fields.

In 2008 Gazprom allocated RUB 1.1 billion and RUB 4.8 billion for the development of the fields and for the construction of the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline.

The 2009 Program stipulates to commit RUB 0.8 and 11.8 billion for the same purposes.

In 2009 the Kamchatka Krai was for the first time involved into the Gazprom’s gasification program. Under the Program the Company is to invest RUB 275 million in the regional gasification. The funds will be used to design and construct a gas lateral connecting the automatic gas distribution station of Petropavlovsk-Kamchatsky to CHP – 2.

In February 2009, led by the Krai’s Governor and with the participation of Gazprom and Kamchatksenergo a meeting was held dedicated to the synchronized commissioning of gas transportation facilities and preparation of Kamchatka’s consumers to receive gas. Based on the meeting results a plan of coordinated actions was elaborated.

The Accord on Gasification for the Kamchatka Krai was inked in January 2008. The gasification level of the Kamchatka Krai is less than 1 per cent (LNG is not supplied).

Natural gas in the amount of 9 million cubic meters is supplied to the settlements of Sobolevo and Ustievoye on the western coast of Kamchatka from the Kshukskoye gas and condensate field.

The regional gas production and transportation is effectuated by Kamchatgazprom (92.25 per cent state-owned). Gazprom is engaged in the acquisition of the company.

Based on the Russian Federation Government’s resolutions adopted at the Vladivostok circuit session of September 1, 2008 the Natural Resources Ministry and the Federal Agency for Subsoil Usage were delegated to resolve the issue of awarding Gazprom the right to use the subsurface resources of the Kirinsky, Vostochno-Odoptinsky and Ayashsky blocks of the Sakhalin III project and the Zapadno-Kamchatsky prospect located on the Okhotsk Sea shelf.