As part of the Supplement (Roadmap) to the Russian-Chinese Memorandum of Cooperation in the natural gas sector signed in June 2009, another round of commercial talks took place in the city of Sanya (PRC) between Gazprom and China National Petroleum Corporation (CNPC) relevant to arranging Russian natural gas supply to China.

The Gazprom delegation was headed by Alexander Medvedev, Deputy Chairman of the Company's Management Committee, while Wang Dongjin, Vice President of CNPC led the Chinese delegation.

The parties continued their work on the basis of the Extended Major Terms of Gas Supply from Russia to China and moved considerably closer to a common standpoint when discussing the technical parameters of supplies. Consideration was given to the financing options for Russian gas supplies via the “western” route (Altai project) to further enhance its economic viability.

As a result of the talks, an action plan was compiled for the Russian and Chinese experts to cooperate as part of the preparations for the next round of talks that will take place in March in Saint Petersburg.

Background:

China National Petroleum Corporation is the largest state-owned petroleum company in China (the Government holds a 100 per cent stake) and is one of the world's leading integrated oil and gas production companies.

Gazprom and CNPC signed the Agreement of Strategic Cooperation on October 14, 2004. The Agreement covers a wide range of joint businesses including examination of the issues relative to the arrangement of natural gas delivery from Russia to China by Gazprom. The opportunities for joint gas processing and gas chemical projects in eastern Russia are also being explored in parallel with those in third countries.

In June 2009 the Russian Government and their Chinese counterparts signed the Memorandum of Understanding for cooperation in the natural gas sector.

In October 2009 Gazprom and CNPC inked the Framework Agreement on major terms and conditions for natural gas supply from Russia to China. In December 2009 Basic Major Terms of Gas Supply from Russia to China were signed.

In March 2010 Gazprom and CNPC entered into the Agreement on developing the feasibility study for gas processing and gas chemical projects.