The Gazprom Management Committee took notice of the information relevant to the activities performed as part of the South Stream project implementation.

The Company’s specialized divisions were tasked to resolve the current issues within the Project Feasibility Study (FS) development, as well as to prepare the documentation for addressing its implementation at the Board of Directors’ meeting.

The meeting emphasized that the South Stream project was being implemented in line with the planned schedule.

Background:

For the purpose of diversifying natural gas export routes Gazprom is exploring the possibility of constructing a gas pipeline across the Black Sea to South European and Central European countries – the South Stream project.

At the pre-investment stage of the Project a number of optional gas pipeline routes are being addressed including onshore sections across the Russian Federation (from the Pochinki compressor station to the Black Sea coast) and several European countries, as well as offshore gas pipelines via the Black and Adriatic Seas (in case the option of gas supply to the Southern Italy is selected).

The South Stream design capacity accounts for 31 bcmpa.

On June 23, 2007 Gazprom and ENI concern signed the Memorandum of Understanding for the South Stream project execution and the Supplement to the Memorandum on November 22, 2007. The said documents stipulate performing a joint assessment of the commercial viability and technical practicability for constructing the South Stream gas pipeline.

On January 18, 2008 the South Stream AG Special Purpose Entity was registered in order to implement the Memorandum provisions. The venture was established by Gazprom and ENI on a parity basis.

To implement the onshore section of the Project outside Russia, intergovernmental agreements have been signed with Bulgaria, Serbia, Hungary and Greece. A relevant draft agreement with Slovenia is being coordinated; another one is to be signed with Austria.

The provisions of the above mentioned agreements stipulate establishing joint ventures responsible for the Feasibility Study development, as well as for the further engineering, construction and operation of the South Stream gas pipeline in the signatory countries provided that the technical practicability and economic viability assessments are confirmed.

The initial stage of the Project execution envisages the development of a consolidated Investment Rationale (IR) embracing IR for the Russian onshore section, FS for the Black Sea offshore section and FS for the onshore sections of Bulgaria, Serbia, Hungary, Slovenia and Greece. Based on the results of the consolidated Investment Rationale a decision with regard to advancing to the investment stage will be taken.

On August 1, 2008 the Coordination Committee Action Plan for the Feasibility Study (Investment Rationale) development of the South Stream project was elaborated and adopted for the purpose of implementing the provisions of the intergovernmental agreements and coordinating activities with the foreign partners in the field of IR development.