Alexey Miller, Chairman of the Gazprom Management Committee and Paolo Scaroni, Chief Executive Officer of Eni held a working meeting today as part of the St. Petersburg International Economic Forum 2011.

The parties discussed the progress with the South Stream gas pipeline construction and noted that the process was on schedule.

In the course of the meeting Alexey Miller and Paolo Scaroni also discussed the potential asset swap deals envisaged by the Strategic Partnership Agreement as well as the preparation of the gas purchase agreement between Gazprom and SeverEnergia.

Background

Italy is one of the major importers of Russian gas in Europe. Gazprom and Eni have established a long-standing partnership.

In 2010 the amount of gas supplied by Gazprom to Italy was equal to 13.05 billion cubic meters.

The year of 2009 was the 40th anniversary of the contracton natural gas supplies to the Apennine Peninsula, signed between Eni and the Foreign Trade Ministry of the USSR.

In November 2006 Gazprom and Eni entered into the Strategic Partnership Agreement. Under the Agreement, the existing contracts for Russian gas supplies to Italy were extended until 2035. Moreover, Gazprom began to directly supply the Italian market with Russian gas in the amount of up to 3 billion cubic meters a year starting from 2007 and was entitled to acquire stakes in Eni's international assets.

On June 23, 2007 Gazprom and Eni signed the Memorandum of Understanding on the South Stream project execution. The Memorandum outlines the areas of cooperation between the companies in designing, financing, constructing and managing South Stream.

On May 15, 2009 Gazprom and Eni inked the second Addendum to the Memorandum of Understanding on the South Stream project execution. The Addendum stipulates an increase in the annual throughput of the gas pipeline offshore section from 31 to 63 billion cubic meters, and regulates the gas marketing issues within the project.

On January 18, 2008 the South Stream AG Special Purpose Entity was registered in Switzerland. The Entity was established by Gazprom and Eni on a parity basis.

On June 19, 2010 Gazprom, Eni and EDF signed the trilateral Memorandum providing for specific steps towards the French company's entry in the shareholding structure of South Stream AG.

On March 21, 2011 Gazprom and Wintershall Holding GmbH inked the Memorandum of Understanding on the South Stream project, providing for participation of the German company in constructing the gas pipeline offshore section.

Yamal razvitiye (owned by Gazprom neft and NOVATEK on a parity basis) holds a 51 per cent stake in SeverEnergia with the remaining 49 per cent owned by Arctic Russia B.V., a joint venture of Italian Eni (60 per cent) and Enel (40 per cent).

SeverEnergia fully owns Arcticgaz, Urengoil Inc. and Neftegaztekhnologia. The companies hold subsurface licenses for oil and gas fields in the Yamal-Nenets Autonomous Okrug: the Samburgsky, Yevo-Yakhinsky, Yaro-Yakhinsky and Severo-Chaselsky blocks. Their ABC1 + 50% C2 reserves amount to 919 billion cubic meters of gas, 330 million tons of oil and 109 million tons of condensate.