Alexey Miller, Chairman of the Gazprom Management Committee and Vyacheslav Gaizer, Head of the Komi Republic signed a Cooperation Agreement today at the Company’s headquarters.

The document recognizes the mutual interest of the parties in implementing Gazprom’s strategic gas transmission projects in the Komi Republic: the Bovanenkovo – Ukhta and Ukhta – Torzhok gas trunkline systems construction. Among other cooperation areas, the Agreement prioritizes prospecting operations, hydrocarbons exploration and production, construction of gas supply facilities at the Syktyvkar industrial hub and the regional gasification system development, including the use of compressed natural gas and liquefied petroleum gas, elaboration and implementation of gas saving technologies, and environmental safety maintenance.

Pursuant to the Agreement, the Komi Government will assist Gazprom in land allocation.

In order to provide the organizations involved in targeted investment programs implementation in the Republic with economic incentives, the Komi Government will draft the local regulations stipulating tax benefits to cover the programs related to comprehensive hydrocarbon fields exploration, regional gas supply system development and energy saving.

Background:

The Komi Republic is a strategic partner of Gazprom. The Republic hosts construction of unique facilities comprising the Bovanenkovo – Ukhta and Ukhta – Torzhok gas trunkline systems (GTS).

In 2008 Gazprom and the Komi Republic Government inked the Partnership Agreement for the period of the Bovanenkovo – Ukhta GTS construction in 2009–2012 and the Gasification Accord.

Between 2006 and 2010 Gazprom’s capital investments in the Komi Republic amounted to RUB 176.2 billion. These funds allowed for gas supply facilities construction at the Syktyvkar industrial hub as well as Ukhtinskaya, Vuktylskaya, Mikunskaya and Sindorskaya compressor stations upgrade. The SRTO – Torzhok gas trunkline laying was underway. Intense operations were carried out at the Bovanenkovo – Ukhta and Ukhta – Torzhok gas trunkline systems. 797.3 kilometers of the 1,244 kilometer long linepipe of the GTS first string were welded up as of March 1, 2011. The first string (70.66 kilometers long) of the Baidarata Bay submerged crossing was completed. 49.7 out of 70.74 kilometers of the second string were welded up and trenched.

Over the same period Gazprom invested RUB 653 million in the Komi Republic gasification raising the local gas penetration level by 2.4 per cent – to 43.8 per cent versus Russia’s average of 63.2 per cent. This year Gazprom will spend RUB 30 million to complete the construction of gas supply facilities in the Republic.