The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Paolo Scaroni, Chief Executive Officer of Eni.

The parties discussed the current issues and prospects for the cooperation deepening in the energy sector.

Alexey Miller and Paolo Scaroni agreed to adjust the terms and conditions for Russian natural gas supplies to Italy.

The meeting participants looked at the progress with the detailed action plan stipulating the South Stream gas pipeline construction with the maximum throughput of 63 billion cubic meters. The parties confirmed their intent to make the final investment decision for the offshore section of the South Stream project this November and to start construction operations in December 2012.

Background

Italyis the second-largest Russian gas importer in the EU after Germany, and Eni has been a long-standing partner of Gazprom.

In 2011 Gazprom supplied Italy with around 17.1 billion cubic meters of natural gas.

In November 2006 Gazprom and Eni entered into the Strategic Partnership Agreement. Under the Agreement the existing contracts for Russian gas supply were extended until 2035. As part of the Agreement Gazprom began to directly supply the Italian market with natural gas in the amount of up to 3 billion cubic meters a year and was entitled to acquire stakes in Eni’s international assets.

With a view to diversify the natural gas export routes Gazprom is implementing the project for construction of a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project. The nominal capacity of the offshore gas pipeline section will be 63 billion cubic meters per year.

Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria in order to implement the onshore gas pipeline section.

On September 16, 2011 the South Stream Transport AG shareholders signed the Agreement for the offshore section of the project. Pursuant to the Agreement, the stakes in the offshore gas pipeline project are distributed as follows: Gazprom – 50 per cent, Italian Eni – 20 per cent, German Wintershall Holding and French EDF – 15 per cent each.

On November 21, 2011 the first South Stream facility, the Banatski Dvor underground gas storage, was commissioned in Serbia.

On December 28, 2011 Turkey granted the permit to construct and operate the South Stream gas pipeline in its exclusive economic zone.

In the third quarter of 2011 the Consolidated Feasibility Study of South Stream was finalized and included the feasibility study of the offshore section and feasibility studies of the respective gas pipelines in the host countries of Southern and Central Europe.

On December 30, 2011 Vladimir Putin, Prime Minister of the Russian Federation authorized Gazprom to speed up the launch of the South Stream project and to start its construction in 2012.

On January 20, 2012 Alexey Miller, Chairman of the Gazprom Management Committee approved a detailed action plan that would make it possible to start the South Stream gas pipeline construction in December 2012.

First supplies via the gas pipeline are planned for late 2015.