The Board of Directors approved the work done relevant to the 2009 Russian Regions Gasification Program. It was noted that before the year end all Gazprom’s obligations on gasification facilities construction would be met. The Management Committee was entrusted with furthering the gasification of the Russian regions in 2010.

The Board of Directors heard information on implementing the major principles of the Company’s financial strategy under the crisis conditions on the global financial markets.

Background:

Starting from 2001, Gazprom has been adopting Russian regions gasification programs. The regional gasification is carried out jointly by Gazprom and federal constituents’ authorities. At the same time, the Company finances construction of inter-settlement gas pipelines, that is gas delivery to population centers, while regional authorities take on street networks laying and preparation of consumers for gas supplies. In order to coordinate the activities, Gazprom and administrative authorities of the Russian constituents listed in the Program, sign synchronization schedules for gasification facilities commissioning.

In 2005 Gazprom considerably intensified the activities aimed at increasing the regional gasification level in Russia. Between 2005 and 2008 the Company allocated over RUB 72 billion to construct inter-settlement gas pipelines. These funds were used to build 696 inter-settlement gas pipelines with the total length of more than 11,000 kilometers.

At present, the average gasification level throughout Russia accounts for 62 per cent, with 67 per cent in cities and towns and 44 per cent in the rural area.

It is projected to invest RUB 18.5 billion in the 2009 Russian Regions Gasification Program. The Kamchatka and Primorsky Krais, the Jewish Autonomous District and the Chechen Republic were included in the Program for the first time.

During 2009 Gazprom additionally assigned RUB 810 million to gasify an electric boiler house in the settlement of Gidrostroitel to supply heat to the city Bratsk (Irkutsk Oblast), gasify the Adler District (Krasnodar Krai) as part of the Program for construction of Olympic facilities and development of Sochi as a mountain-climatic resort, as well as to start gasification in the Republic of Ingushetia.

Thus, in 2009 the number of regions provided with gas, the Republic of Ingushetia inclusive, grew up to 69, while the aggregate amount of investments in the gasification sector amounted to RUB 19.310 billion. All the gasification facilities of Gazprom scheduled for the current year will be built. The next year investments in the gasification sector are projected to reach RUB 25 billion.

In 2009 Gazprom completed the construction of 189 inter-settlement gas pipelines with the total length of 3.2 thousand kilometers that will carry natural gas to 447 population centers in 45 regions of the Russian Federation. Taking into account the proposals by regional administrative authorities and the level of consumer preparation for gas deliveries, four inter-settlement gas pipelines were constructed ahead of schedule in the Vladimir Oblast, the Republic of Chuvashia and another two in the Leningrad Oblast. Early construction of seven gas pipelines is nearly completed. They will supply gas to the boiler houses of Saint Petersburg, as well as to the village of Egla (Novgorod Oblast) and the village of Malye Bornitsy (Gatchina District, Leningrad Oblast).

At the same time, 22 regions fell behind the schedules for preparation of consumers for gas supplies. Until the year end, this backlog is to be eliminated in 15 regions, while in seven regions the obligations to prepare consumers for gas supplies will not be met.

Gazprom’s further activities to deliver natural gas to Russian regions will be oriented at achieving the maximum possible and economically viable level of gasification in the Russian Federation. At the same time, great attention will be paid to the gasification of Eastern Siberia and the Far East. Gazprom is going to continue streamlining the cooperation with the administrative authorities of Russian constituents to ensure loading of gas transmission facilities once their construction is completed.

As in previous years, meeting the obligations assumed by the administrations in respect to the preparation of consumers to receive gas, as well as timely and full payment for gas supplies will remain the key factors while allocating the investments within the Gasification Program.