On February 23, in Rio de Janeiro, Gazprom and Brazilian Petrobras oil and gas company signed a Memorandum of understanding. On behalf of Gazprom the Memorandum was signed by Stanislav Tsygankov, Head of the Gazprom Foreign Economic Relations Department and on behalf of Petrobras the Memorandum was signed by Ildo Sauer, Gas and Energy Director of Petrobras.

The document stipulates mutually beneficial cooperation in the hydrocarbon exploration, production, transmission and marketing sectors. The special meaning is paid to cooperation in offshore field development as well as modern technologies and LNG production.

The document signing was followed by two-side negotiations. The parties discussed issues relevant to the Memorandum implementing, study group schedule and scope of work and the number of projects representing the mutual interest. In the top-priority plan the parties agreed to set up cooperation in the LNG marketing sector, hydrocarbon exploration and production in the Latin American continent, the regional gas transmission systems development. Special attention was paid to progress with implementing Trans Latin American gas pipeline. Gazprom’s representatives confirmed its interest in engineering and construction works for said gas pipeline.

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In 2006 proved oil and gas reserves in Brazil were at 1.5 bln tons and 326 bcm of gas, respectively. The major part of reserves is located in deep water fields. In Brazil there are over 100 oil and gas fields situated in eight oil and gas basins.

In 2006 Brazil produced more than 90 mln tons of oil and 11.5 bcm of gas. The gas volumes produced can not satisfy internal demand at the full extent. Natural gas consumption in 2006 was equal to more than 19 bcm. The missing volumes were imported from Bolivia and Argentina.

The major player on the Brazilian oil and gas market is Petryleo Brasileiro- Petrobras created in 1953 (the major shareholder is the Government of Brazil. The Government holds more than 32 per cent stake in the Company).

Up to 1997, Petrobras was a monopolist in production, processing and marketing of oil and gas, but at present the Company is a dominating player in the oil and gas sector (the Company controls more than 95 per cent of crude oil and 90 per cent of natural gas reserves) of Brazil.

Additionally, Petrobras controls Brazilian oil and gas transmission network (6400 km of oil pipelines, 2500 km of gas pipelines, offshore terminals and storages) and holds 11 refineries.