Today in Bishkek, Alexey Miller, Chairman of the Gazprom Management Committee and Sapar Balkibekov, Industry, Energy and Fuel Resources Minister of the Kyrgyz Republic signed in the presence of Dmitry Medvedev, President of the Russian Federation and Kurmanbek Bakiev, President of the Kyrgyz Republic, a Memorandum of Understanding to develop cooperation within the privatization of a part of the state-owned stake in Kyrgyzgaz.

Pursuant to the document the parties will address this issue and develop the principles for Gazprom’s participation in the Kyrgyzgaz privatization.

“Cooperation between Gazprom and Kyrgyzstan is of a constructive, long-standing and mutually beneficial nature. Our company has proven its reliability as a partner in the area of hydrocarbon exploration and production, as well as upgrade and utilization of underground gas storage capacities in the Republic. We hope for further strengthening of the bilateral relations. Having obtained the status of a strategic investor in the oil and gas sectors of Kyrgyzstan, Gazprom will promote implementation of a long-term investment program focused on supply indigenous gas to the Republic,” stated Alexey Miller.

Background:

In May 2003 Gazprom and the Government of the Kyrgyz Republic signed the long-term Agreement of Cooperation in the gas industry for the term of 25 years in order to establish a legal framework for strategic cooperation.

In particular, the Agreement provides for:

exploration; development and operation of hydrocarbon fields on the territory of the Kyrgyz Republic;

upgrade, construction and operation of gas trunklines and other gas industry infrastructure facilities in the Kyrgyz Republic;

gas transportation and supply for the implementation of joint projects.

In January 2004 the Plan for top-priority joint actions by Gazprom and the Government of the Kyrgyz Republic for the implementation of the above mentioned Agreement was approved.

In January 2006 Gazprom and the Government of the Kyrgyz Republic signed the Memorandum of Intent aimed at establishing a joint Russian-Kyrgyz venture in the oil and gas industry.

In May 2007 Gazprom and the Government of the Kyrgyz Republic signed the Agreement on the common principles for the geologic survey of subsoil resources in order to lay the cornerstone (form a resource base) for the joint venture operation.

In February 2008 Gazprom was granted licenses for geological survey of the subsurface resources in the promising oil and gas areas of Kugart and Eastern Mailu-Suu IV. In July 2008 Gazprom and the Government of the Kyrgyz Republic approved the Stepwise Program for geological survey of the subsurface resources in the said areas.

The proven reserves of natural gas in Kyrgyzstan are estimated at 6 bcm. The development of natural gas fields is hindered by the geologic peculiarities and insufficiently developed infrastructure. Domestic production of natural gas in the Republic totals some 30 mcm per annum. Production is forecasted to reach 40 mcm by 2010.

Kyrgyzgaz is the owner of the gas transportation and distribution systems of the Kyrgyz Republic.

In 2006 Gazprom neft Asia, a subsidiary of Gazprom neft, was established in Kyrgyzstan. The company is the country’s largest operator on the wholesale and retail markets dealing with petroleum products and liquefied hydrocarbon gases.

Gazprom neft Asia’s portfolio contains 9 oil storage facilities, 82 filling facilities and 2 clusters of liquefied hydrocarbon gas.

In 2008, 6 fueling stations were launched in the Narynskaya, Talasskaya and Oshskaya Oblasts. By now, the company’s filling network embraces all the regions of the Republic.

Besides Kyrgyzstan, Gazprom neft Asia is represented on the markets of Tajikistan and Kazakhstan via its subsidiaries Gazprom neft – Tajikistan and Gazprom neft – Kazakhstan.