The meeting of the Gazprom Board of Directors is underway at the Company’s headquarters.

The Board of Directors approved the work done by Gazprom relevant to the 2009 Investment Program execution and tasked the Company’s Management Committee to continue efforts on implementing the Investment Program for 2010.

It was noted that as a result of the 2009 Investment Program implementation Gazprom achieved the targeted reserves replenishment rate, the reliable operation of industrial facilities intended for gas production, transmission and underground storage, as well as the successful fulfillment of the Company’s top-priority gas production and transmission projects.

Background:

The amended 2009 Investment Program of Gazprom was compiled with due regard for the influence of the global financial and economic crisis and was endorsed by the Company’s Board of Directors in September 2009. The total amount of investments was identified at RUB 761.53 billion including capital investments – RUB 483.48 billion and long-term financial investments – RUB 278.05 billion.

Pursuant to the amended 2009 Investment Program of Gazprom, commissioning of a number of production capacities was rescheduled. Namely, due to the decrease in the forecast gas demand, the Company postponed the commissioning of the first startup complexes of the Bovanenkovo field and the Bovanenkovo – Ukhta gas trunkline system from the third quarter of  2011 to the third quarter of 2012. Taking into account the market environment, Gazprom had to cut the investments in developing the production capacities and natural gas processing and underground storage facilities, as well as in the Comprehensive Program for the reconstruction and technical re-equipment of gas transmission facilities between 2007 and 2010.

At the same time, the 2009 Investment Program provided for committing more funds to  the major top-priority projects such as the Gryazovets – Vyborg, the SRTO –  Torzhok and the Pochinki – Gryazovets gas pipelines construction.

In addition, larger investments were made in the projects of the national strategic importance being implemented according to the orders by the federal authorities and having the essential meaning for the Russian regions gasification. For instance, capital investments were increased for the Sakhalin – Khabarovsk – Vladivostok gas pipeline construction and for the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project implementation.

The Long-Term Financial Investment Plan implemented by Gazprom in 2009 secured the Company’s participation in the development and operation projects for the Shtokman and Prirazlomnoye fields, as well as the Sakhalin II, the Nord Stream and the South Stream projects.

Pursuant to the 2010 Investment Program, the total amount of investments in 2010 will make up RUB 802.4 billion, capital investments – RUB 663.56 billion and long-term financial investments – RUB 138.84 billion. The 2010 Investment Program was compiled with due consideration of the preset deadlines for the paramount investment projects having fundamental significance for the development of Gazprom and the entire country.

According to the document, in 2010 the production priorities are the Bovanenkovo and the Shtokman fields pre-development. The work is underway to pre-develop the Apt-Albian deposits of the Nyda area in the Medvezhye gas and condensate field; the Zapadno-Pestsovaya area in the Urengoy oil, gas and condensate field; the Yamburg gas and condensate field, the Kharvutinskaya area inclusive; as well as the Zapolyarnoye, Urengoy and other fields.

In the field of gas transmission top priority is given this year to construction of the Bovanenkovo –  Ukhta gas trunkline system, the Gryazovets – Vyborg, the Pochinki – Gryazovets, the Zapolyarnoye – Urengoy and the Dzhubga – Lazarevskoye – Sochi gas pipelines. The investments are being made in the Obskaya – Bovanenkovo railroad construction.

The 2010 Investment Program stipulates allocation of funds for the Eastern Gas Program, in  particular, for the Sakhalin – Khabarovsk – Vladivostok, the CGTU-2 of Nizhne-Kvakchikskoye gas and condensate field – AGDS of Petropavlovsk-Kamchatsky gas trunklines, as well as pre-development of the Kshukskoye and Nizhne-Kvakchikskoye fields.

Investments were also made in retrofitting the major gas production and transmission facilities, technical re-equipment of underground gas storage facilities, construction and re-construction of gas processing facilities, as well as design and engineering, geological exploration and production drilling in fields.

The 2010 Long-Term Financial Investment Plan stipulates, inter alia, Gazprom’s participation in the Shtokman and Prirazlomnoye fields development and operation, as well as the Nord Stream and the South Stream gas pipelines construction. The Company has also allocated funds for power generation projects and for the projects implemented abroad.

According to the Plan, Gazprom acquired 12.5 per cent of Beltransgaz shares in 2010, thus raising its stake to 50 per cent, and settled the accounts related to a 51 per cent stake acquisition in SeverEnergia.