The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company's Management Committee, and Alexander Khoroshavin, Governor of the Sakhalin Region and the Region Government Chairman.

Alexey Miller emphasized that implementation of projects in Eastern Russia was the Company's top priority. The issue of significantly boosting the Eastern Gas Program pace will soon be addressed by the Gazprom Management Committee and then – by the Company's Board of Directors.

The Sakhalin Region is among Gazprom's investment activity centers in the Far East. In this context, it was mentioned that between 2008 and 2011 the Company's capital investment in the Region exceeded RUB 95 billion. In particular, a part of the Sakhalin – Khabarovsk – Vladivostok gas transmission system (GTS), the main compressor station, the Dalneye gas distribution station (GDS), a gas lateral from the Southern product transfer facility of the Sakhalin II project to the Dalneye GDS were constructed. Pre-development of the Kirinskoye field started as part of the Sakhalin III project offshore Sakhalin.

This year the Onshore Processing Facility (OPF) construction and the Kirinskoye field pre-development went on and construction of production wells was launched. Besides a gas pipeline was completed from the OPF to the Sakhalin main compressor station of the Sakhalin – Khabarovsk – Vladivostok GTS.

In 2012 Gazprom will spend more than RUB 43 billion on projects in the Sakhalin Region including the Sakhalin III project.

Special attention was paid to the gasification development in the Region. Between 2008 and 2011 Gazprom allocated RUB 1.6 billion for these purposes that made it possible, inter alia, to elaborate a general scheme for gas supply to and gasification of the Region, construct inter-settlement gas pipelines to the Novo-Alexandrovsk settlement and CHPP-1 of Yuzhno-Sakhalinsk.

In 2012 the Company will invest RUB 700 million in construction of gas distribution networks in the Sakhalin Region. At present construction operations are underway at the Nogliki GDS and inter-settlement gas pipelines from the GDS to the Nogliki CHPS (the existing gas pipeline of the Katangli settlement will be connected) and further on to the Nysh settlement, inter-settlement gas pipelines from the Novo-Alexandrovsk settlement to the Klyuchi and Sanatornoye population centers. It is planned to commission the above mentioned facilities in 2013. The terms of consumers' preparation for gas supplies will be taken into account. Design and survey operations are in progress to build gasification facilities in the Tymovsky District.

The meeting also discussed wider natural gas use as a motor fuel. At present, Gazprom and the Region's Government are elaborating a program to convert motor vehicles and agricultural machinery to natural gas.

Background

Gazprom and the Sakhalin Region Government entered into the Agreement of Cooperation and the Accord on Gasification in September and November 2006 respectively. The joint program for the regional gasification development until 2014 was approved in 2011.

The gasification level in the Sakhalin Region is at 8.5 per cent including 8.4 per cent in cities and towns and 9.4 per cent in the rural area. The identical figures throughout Russia average 63.2, 70 and 46.8 per cent accordingly.

In 2009 Gazprom developed and adopted the General Scheme for gas supply to and gasification of the Sakhalin Region.

In March 2011 Gazprom commissioned gas supply facilities to convey gas to Yuzhno-Sakhalinsk and launched gas supply to the regional center.