The Management Committee approved the 2012 Report on the progress with the Gazprom Innovative Development Program until 2020. The Report will be submitted to the Company's Board of Directors for consideration.

The meeting emphasized that in 2012 the Program had been executed with high efficiency. This is illustrated by the key performance indicators (KPI) and the additional performance indicators (PI) the Program is based on. In particular, the project operational costs decreased by 1.28 per cent due to the application of innovative technologies. Specific energy consumption for process needs decreased by 4.85 per cent, specific greenhouse gas emissions in the CO2 equivalent – by 4.1 per cent.

The expected efficiency of innovative technologies developed by Gazprom in 2012 will amount to 2 rubles for every 1 ruble invested.

Gazprom is among the leading Russian companies in terms of investments into research and development (R&D). In 2012 a total of RUB 7.7 billion was allocated for this purpose, which is about 0.2 per cent of the Company's proceeds. Inter alia, RUB 1.2 billion was allocated for R&D to meet the technical priorities determined in the Program. For example, technical specifications and solutions were developed to create facilities for submerged (subglacial) production of hydrocarbons during the pre-development of the Kara Sea fields. The Technical Control System for Line Pipe Sections of Gas Trunklines Integrated into the Unified Gas Supply System was further improved. A set of non-destructive testing equipment to control the condition of gas trunklines was under development. Research was conducted on a technology for high-sulfur fuel oil refining at the Astrakhan Gas Processing Plant and a gas-to-liquids technology based on petroleum gases.

In 2012 Gazprom's capital investments into gas, oil and power generation projects with the application of innovative technologies exceeded RUB 30 billion.

As part of its innovative development activities Gazprom continued cooperating with RUSNANO. For instance, anticorrosive metallized coatings were introduced at the Astrakhan GPP. As a result, the corrosion of the working surfaces of processing units was retarded and their service lives increased considerably. The economic effect of introducing the coatings exceeded RUB 700 million.

The companies were also working on other innovative solutions, for instance, in the area of sulfurous asphaltconcrete, energy-saving equipment, water and solution purifier membrane production. The coatings that may contribute to extending the service life of pipe products were tested.

In 2012 Gazprom maintained sci-tech cooperation with 11 leading international energy utilities. Among other things, Gazprom showed to its partners several Russian innovative solutions. GDF Suez experts pointed out a high level of the Russian equipment that had been used for the comprehensive inspection of a subsurface gas pipeline section without ILI tools. Joint tests ran by Gazprom and BASF/Wintershall showed that the Russian microbiological product for soil decontamination from hydrocarbon pollution proved better under certain conditions than its counterparts.

Interaction continued with nine prominent Russian higher education institutions. Cooperation agreements are concluded with all of them; research plans are being pursued with four of them. In addition, Gazprom cooperates with higher education institutions in training and retraining the personnel of the parent company and its subsidiaries.

Steps were taken to streamline the intellectual property management system as well as the standardization system.

Background

In June 2011 the Gazprom Board of Directors approved the Company's Innovative Development Program until 2020.

The Program is aimed at continuously improving Gazprom's technology level for maintaining the Company's position of a technology leader in the global energy business.

The document contains a set of measures for developing and introducing new technologies, innovative products and services at Gazprom's hydrocarbon production, transmission & processing facilities and power plants as well as measures for creating favorable conditions for the sake of intense innovative development.

The Program stipulates a pro-active approach to cooperation with corporate and independent research institutions as part of R&D activities as well as with higher education institutions in joint studies and staff training.