Headed by Alexey Miller, Chairman of the Gazprom Management Committee, a Gazprom delegation today paid a working visit to Italy.

In the course of the visit Alexey Miller met with Romano Prodi, Chairman of the Council of Ministers of the Republic of Italy and Paolo Scaroni, Chief Executive Officer of ENI.

At the meetings the parties addressed further prospects for the Russian-Italian cooperation in the oil and gas sector. In particular, special attention was paid to the South Stream gas pipeline construction and interaction between Gazprom and ENI within the joint hydrocarbon exploration and production projects in third countries including Libya.

The parties confirmed their interest in strengthening the mutually beneficial strategic partnership between Russia and Italy in the energy sector under the European gas market liberalization conditions.

Reference:

The Italian natural gas market is the third largest market in Europe after the United Kingdom and Germany. The share of gas in the Italian energy balance exceeds 30 per cent. The main gas importers to Italy are Algeria and Russia.

Italy is the second largest importer of Russian gas in Europe. In 2007 Gazprom export supplied circa 21.96 bcm of gas.

In November 2006, Gazprom and ENI entered into the Strategic Partnership Agreement stipulating an opportunity for Gazprom to provide direct Russian gas deliveries to the Italian market starting from 2007. Annual gas volumes will be gradually increased to 3 bcm by 2010. Pursuant to the Agreement the existing contracts for Russian gas supply to Italy are extended till 2035.

On April 4, 2007, as part of the Strategic Partnership Agreement, Gazprom signed a Call Option Agreement with ENI and Enel to purchase assets included in the lot 2 of the auction for Yukos Oil Company property.

The auction resulted in EniNeftegaz (consortium between ENI (60 per cent) and Enel (40 per cent)) purchasing the following gas assets: Arcticgaz (100 per cent), Urengoil (100 per cent), Neftegaztekhnologiya (100 per cent), and Gazprom Neft (20 per cent).

On June 23, 2007, Gazprom and ENI signed the Memorandum of Understanding for the South Stream project execution.

The Memorandum sets the cooperation areas for both companies in the South Stream engineering, financing, construction and management sectors.

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