The Gazprom Management Committee has approved the work being performed by the Company to implement the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program).

Gazprom’s specialized subdivisions and subsidiaries were tasked to prepare the proposals on wholesale gas prices in Eastern Siberia and the Far East with due consideration for environmental and technological benefits of natural gas.

The Management Committee ordered that cooperation with executive authorities be continued on creating the favorable environment for further efficient implementation of the Eastern Gas Program.

Gazprom’s specialized subdivisions and subsidiaries were entrusted with finalizing the Investment Rationale in the first half of 2011 covering the Chayanda field pre-development, gas transmission and processing. The document will, among other things, define the layout of the gas processing plant and the gas chemical facility with due regard for the considered issues in the field of helium production, transportation, storage and marketing.

The Management Committee ordered that the geological survey be arranged with a view to create an underground helium storage site on the basis of the Chayanda field.

The Management Committee entrusted the specialized subdivisions with furthering the pre-investment studies aimed at creating Gazprom’s gas liquefaction/compression facilities near Vladivostok for subsequent marine transportation.

Background:

The state-run Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program) was approved by the September 2007 Order of the Russian Federation Industry and Energy Ministry. Gazprom was appointed by the Russian Government as the Program execution coordinator.

At present, Gazprom Group holds licenses for the right to use Eastern Russia’s subsurface resources in the following regions: Krasnoyarsk Krai, Irkutsk Oblast, Republic of Sakha (Yakutia), Kamchatka and the Sea of Okhotsk offshore areas. The Company is performing geological exploration in Yakutia, the Krasnoyarsk and Kamchatka Krais, the Irkutsk Oblast and offshore Sakhalin and Kamchatka.

In September 2010 the Yakutian Chayanda field development plan was approved and a new field was discovered in the Kirinsky block of the Sakhalin shelf.

Among gas trunkline projects, the Sakhalin – Khabarovsk – Vladivostok GTS is a top priority of the Eastern Gas Program. In pursuance of the order by the Russian Government and the decision by the Gazprom Board of Directors adopted in September 2008, the work is currently underway to create this GTS for the purpose of developing gas supply to the Khabarovsk Krai and the Sakhalin Oblast, and arranging gas supply to the Primorsky Krai. The first startup complex of the said GTS is to be put onstream in the third quarter of 2011.

In September 2007 the Russian Government adopted the decision prescribing Gazprom to join the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project and gave specific instructions on the crucial issues within the project. The Kshukskoye and Nizhne-Kvakchikskoye fields located on the west coast of the Kamchatka Peninsula will become the resource base for the project. In September 2010 the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline and the inter-settlement gas pipeline to CHPP-2 of Petropavlovsk-Kamchatsky were put into operation. Gas supplies have been launched. The gasification program for the Kamchatka Krai will be continued.

As part of the Eastern Gas Program, Gazprom is elaborating the concepts aimed at creating gas chemical capacities in Eastern Siberia and the Far East.

By now, Gazprom has inked Cooperation Agreements with eleven Eastern Siberian and Far Eastern regions out of fifteen; nine regions have inked Gasification Accords with the Company.

In 2005 Gazprom developed the General Scheme for Gas Supply to and Gasification of the Irkutsk Oblast, which was updated in 2009. In 2007 the General Scheme for Gas Supply to and Gasification of the Far Eastern Federal Okrug was developed. In 2009 Gazprom finally developed the General Schemes for eleven Eastern Siberian and Far Eastern regions. The work is underway to prepare General Schemes for another two regions of Eastern Russia.

The General Schemes stipulate a comprehensive approach to the gasification of the Eastern Siberian and Far Eastern regions. The Schemes also provide for a wide use of liquefied hydrocarbon and natural gases in parallel with pipeline natural gas.