The Board of Directors took notice of the information about Gazprom Group’s activity on the North American market.

For the purpose of expanding Gazprom Group’s presence on the global energy market, diversifying export routes and sales markets, ensuring safety and reliability of natural gas supplies, the Board of Directors tasked the Management Committee with arranging the work aimed at consolidating the Company’s stand on the natural gas and power generation markets of North America pursuant to the Gazprom LNG Production and Supply Strategy.

Background:

The USA is the world’s leading natural gas consumer (22 per cent of global consumption), while Canada and Mexico take the fourth and the eleventh places, respectively. North American countries make a 27 per cent contribution to the worldwide gas consumption.

The USA satisfies 87 per cent of its demand with domestically produced gas, 11 per cent – with pipeline gas imports and 2 per cent with LNG imports. Canada produces much more gas than it needs, supplying unconsumed gas to the USA. Mexico meets the bulk of its demand with the gas produced in the country.

The overall capacity of regasification terminals on the North American market, including those under construction, makes up some 200 billion cubic meters per annum.

The North American market features the following advantages:

- high liquidity;

- high capacity of regasification terminals and advanced gas transportation infrastructure;

- gas prices reflect the actual balance of supply and demand;

- cost-intensive development of local gas reserves, which will sustain a high price level in the long run;

- development of gas-fired power generation facilities provokes gas demand growth.

North America is a target market according to Gazprom Group’s LNG Production and Supply Strategy approved by the Company’s Board of Directors in March 2008. The document provides for Gazprom’s activities in liquefaction, sea-borne transportation, regasification and distribution sectors.

Gazprom Group is going to supply LNG to the North American market from two Russian projects: Sakhalin II and the Shtokman field.

At present, Gazprom Group is creating a customer base in North America and forming the required portfolio of contractual assets including the lease of gas transportation, regasification and underground storage facilities.

The access to the North American power generation market will increase gas sales efficiency and diversify market risks. In addition, participation in the power generation sector will improve market operations through optimizing the balance between natural gas and electric energy.

The prospects for expanding Gazprom Group’s presence in the North American market are linked with the following sectors:

- regasification terminals;

- gas marketing;

- hydrocarbon business.