The Board of Directors took notice of the information about the work being done by Gazprom and its subsidiaries in Russian Federation constituents. The Board approved the efforts taken to implement the Russian Regions Gasification Program in 2012. The Management Committee was tasked to carry on this work in 2013.

Gazprom is the largest energy company of the Russian Federation. It operates in 81 out of 83 Russian regions. Gazprom's industrial facilities are located in 74 constituents. The Company sells more than a half of produced gas domestically.

Being a major tax payer in Russia, Gazprom allocated RUB 977.9 billion alone between 2007 and 2011. According to provisional estimates, in 2012 allocations in regional budgets will exceed RUB 262 billion.

Gazprom's strategically important initiatives in Russia include the Gasification Program which has a direct influence on the socioeconomic development of regions and living conditions.

Between 2005 and 2012 Gazprom allocated some RUB 180 billion (net of expenditures on construction of gas branches and gas distribution stations being an integral part of the regional gasification process) to the gasification of Russian regions. Over the mentioned eight years the Company built 1,527 inter-settlement gas pipelines with the length exceeding 21.8 thousand kilometers, supplied gas to nearly 600 thousand apartments and households, as well as 3,623 boiler houses in 2,753 population centers.

In 2012 Gazprom allotted a record amount, RUB 33.8 billion, to the Program implementation. Like in previous years, Gazprom fully met its obligations. For instance, in 40 Russian constituents construction operations were completed at 235 inter-settlement gas pipelines with the total length of 3.38 thousand kilometers and seven gas pipelines were constructed ahead of schedule. This makes it possible to supply gas to more than 54 thousand apartments and households in 429 population centers. At the same time, only 11 out of these 40 regions fully met their obligations on consumers preparation for gas supplies.

This year Gazprom is planning to spend RUB 33.4 billion on the Program implementation.

Gazprom is intensely cooperating with Russian constituents to expand the NGVfuel market. Today the Company operates 210 CNG filling stations in 54 Russian regions. With a view to step up the development of regional NGV fuel markets, Gazprom has included the projects for CNG filling stations construction and motor vehicles conversion to natural gas into the Gasification Program starting from 2013. This year's investments will amount to RUB 1 billion.

Gazprom ensures reliable gas supplies to Russian consumers. At the same time, enhancing the payment discipline remains a crucial issue. As of January 1, 2013 the total amount of consumers' indebtedness for gas supplied by Gazprom was around RUB 83.4 billion.

Developing the power generation sector and improving the energy efficiency is among Gazprom's crucial activities in Russian regions. Gazprom Group is the leader in terms of total installed capacity (around 38 GW). It successfully implements the investment program on building new generating capacities. Under the Capacity Supply Agreement Program, some 4 GW of generating capacities are being built in the Central, Northwestern, Urals and Southern Federal Districts. According to provisional data, Gazprom Group spent around RUB 50 billion on power stations construction in 2012.

Gazprom Group continues its efforts related to thermal power generation development in Russian regions. Between 2005 and 2012 the amount of investments in construction and upgrade of heat supply facilities in Russia was nearly RUB 48.3 billion. This activity covered 17 Russian regions. Over the stated period the Company constructed and upgraded 354 boiler houses, 14 power generating units as well as more than a thousand kilometers of heat supply networks. This helped to increase the energy efficiency and improve the ecological situation.

Background

Gazprom's operating principles are determined by the Regional Policy Concept. The Company has a multi-level system of interaction with Russian authorities, basing on Agreements of Cooperation. In furtherance of the Agreements, Accords are made, e.g. on gasification of the regions, implementation of large investment projects, socioeconomic development of areas, wider use of gas as a motor fuel. The Regional Policy Commission carries out the analysis of Gazprom's activities in the regions on a regular basis.

In 2012 Gazprom stepped up its efforts on developing the regional NGV fuel markets. The special-purpose Gazprom Gazomotornoye Toplivo was set up to meet the set objective. Proposals on joint development of the NGV infrastructure were sent to 69 Russian constituents participating in the Gasification Program. By now, 10 regions have created a list of pilot investment projects on CNG filling stations construction, developed feasibility studies and adopted decisions to start construction as early as in 2013. Six regions have created a list of pilot investment projects and are finishing the feasibility studies. 23 regions are engaged in determining the locations of future GNG filling stations.