Today within the 3rd St. Petersburg International Economic Forum Alexey Miller, Chairman of the Management Committee, Gazprom met with Dusan Bajatovic, Director General, Srbijagas.

The parties discussed the issues related to current cooperation in the oil and gas industry. Special attention was paid to strategic projects: the South Stream gas pipeline and the Banatski Dvor underground gas storage facility.

The meeting participants noted that the joint venture registration was at the final stage and agreed that the companies would start developing the feasibility study so far. A joint technical workgroup is to be established and to start working next week.

The parties discussed the issues of preparing the agreement providing for the principle conditions for the Banatski Dvor project implementation laying the basis for Gazprom to make the investment decision and to set up a joint venture. Since Banatski Dvor is a strategic project for Serbia and there is a tight deadline for gas injection, the meeting participants decided that Srbijagas would start it and they would make a swap deal afterwards. Construction of a new underground gas storage facility in Serbia was discussed.

It was noted that Gazprom supported Srbijagas in its intention to increase the share in Yugorosgaz to 49 per cent.

Background:

In 2008 Gazprom export supplied over 2.2 billion cubic meters of natural gas to Serbia.

Founded on October 1, 2005 by the Government of the Republic of Serbia within the reorganization of the state-owned company NIS (Naftna Industrija Srbije – Serbian Oil Industry), Srbijagas is the Serbian state-owned company dealing with natural gas transmission, distribution and storage in Serbia.

Gazprom is investigating the possibility of constructing a pipeline across the Black Sea to the South and Central Europe – the South Stream project – to diversify natural gas export routes.

In order to construct the onshore section of the project, intergovernmental agreements were concluded with Bulgaria, Serbia, Hungary and Greece.

On December 24, 2008 Gazprom and Srbijagas signed the Basic Terms of the Basic Cooperation Agreement on the South Stream project implementation on the territory of Serbia, and on May 15, 2009 – the Basic Cooperation Agreement itself.

The document stipulates the principles of interaction between the parties on the pre-investment stage of the project and determines the conditions and rules for the creation, as well as operation mechanisms for a joint venture (JV) that will be set up for the design, construction and operation of the Serbian section of South Stream. Gazprom will hold 51% in the JV, Srbijagas – 49%

Yugorosgaz was established in 1996 pursuant to the Intergovernmental Agreement between Russia and Yugoslavia. Yugorosgaz is mainly focused on gas pipeline engineering, construction and operation, as well as natural gas transit and marketing. Yugorosgaz is co-owned by Gazprom (50 per cent), Srbijagas (25 per cent) and Central ME Energy & Gas AG (25 per cent).