Led by Alexander Ananenkov, Deputy Chairman of the Gazprom Management Committee, the Company’s delegation launched its business trip to the Far Eastern regions.

Previously, Gazprom’s experts had visited construction facilities of the Sobolevo – Petropavlovsk-Kamchatsky gas pipeline, as well as pre-development and drilling facilities of the Kshukskoye and Nizhne-Kvakchikskoye fields.

Today in Petropavlovsk-Kamchatsky Alexander Ananenkov held a working meeting on the implementation of the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky investment project.

Taking part in the meeting were Sergey Pakhomov, Deputy Chairman of the Kamchatka Krai Government, Yaroslav Golko, Member of the Management Committee – Head of the Investment and Construction Department of Gazprom, heads and experts from Gazprom’s specialized subdivisions, subsidiary companies and contracting agencies.

Alexander Ananenkov emphasized that Gazprom was implementing the investment project on gas supply to the Kamchatka Krai according to the assignments by the Russian Federation President and Government. The project is of great socio-economic significance: it will raise stability of the regional energy sector and reduce dependence on the fuel produced outside the Krai.

It was noted that the project was being carried out in compliance with the schedule. So far, out of the required 392 kilometers of the Sobolevo – Petropavlovsk-Kamchatsky pipeline’s linear part, over 340 kilometers have been constructed, production drilling is being carried out and pre-development operations continue at the Kshukskoye and Nizhne-Kvakchikskoye fields. Comprehensive geophysical and geotechnical surveys of wells have been completed.

The project engaged around one thousand of constructors and over 500 units of equipment.

Based on the meeting results, Gazprom’s specialized subdivisions and subsidiaries were entrusted with the tasks aimed at gas supply facilities construction in the Kamchatka Krai within the preset deadline.

Today Alexander Ananenkov also held a meeting with energy experts of the Kamchatka Krai. The discussion centered on the preparation of the Krai’s consumers for gas supplies. Special attention was paid to synchronizing the operations on gas supply to Petropavlovsk-Kamchatsky and converting the city’s CHPP-1 and CHPP-2 to natural gas. In addition, the pricing parameters for natural gas were discussed.

Background:

In September 2007 the Russian Federation Industry and Energy Ministry’s Order approved the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program). Gazprom was appointed by the Russian Federation Government as the Program execution coordinator.

The new Krasnoyarsk, Irkutsk, Yakutia, Kamchatka and Sakhalin gas production centers will be created in Eastern Russia.

In September 2007 the Russian Government adopted the decision prescribing Gazprom to join the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project.

As part of the project Gazprom is performing production drilling and pre-development the Kshukskoye and Nizhne-Kvakchikskoye fields on the western coast of the Kamchatka Peninsula and is constructing the 392-kilometer Sobolevo – Petropavlovsk-Kamchatsky gas trunkline. It is projected to bring onstream the gas pipeline and to start gas supplies to consumers in 2010. The project also stipulates developing gas distribution networks in Petropavlovsk-Kamchatsky.

The projected natural gas production from both the Kshukskoye and Nizhne-Kvakchikskoye fields accounts for 750 million cubic meters per annum.

Gazprom invest Vostok (100 per cent subsidiary of Gazprom) is the customer of the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project.

In June 2009 the Russian Federation Government resolved to grant Gazprom the subsurface license for the Zapadno-Kamchatsky Block.

Gazprom and the Kamchatka Krai Government entered into the Accord on Gasification in January 2008, and into the Agreement of Cooperation in February 2009.

In 2009 the Kamchatka Krai was first included into the Gasification Program for the Russian Federation regions. As part of the Program Gazprom will allocate funds to design and construct a gas lateral from the automated gas distribution station of Petropavlovsk-Kamchatsky to CHPP-2.

The gasification level in the Kamchatka Krai is below 1 per cent (LNG is not supplied). Natural gas in the amount of 9 million cubic meters is supplied to the settlements of Sobolevo and Krutogorovsky on the western coast of Kamchatka from the Kshukskoye gas and condensate field.

The regional gas production and transportation is effectuated by Kamchatgazprom (92.25 per cent state-owned, Gazprom is engaged in acquisition of this stake).