Led by Alexey Miller, Chairman of the Gazprom Management Committee, the Company’s delegation paid a working visit to Azerbaijan. As part of the visit Gazprom export and the State Oil Company of Azerbaijan Republic (SOCAR) signed a natural gas purchase and sale contract.

Pursuant to the long-term contract, the initial volumes of gas to be purchased by Gazprom will account for 500 million cubic meters with a subsequent increase according to the Azerbaijani party’s export potential. The contract doesn’t limit the maximum purchase volume. The gas price will be defined under a price formula. Gas supplies will start from January 2010.

Following the contract signing, the Gazprom Management Committee Chairman Alexey Miller stated: “Gazprom owns the world’s largest contract portfolio for gas supply to the domestic and foreign markets as well as an advanced and flexible gas transmission system; Russia and Azerbaijan have a common border and have already been connected by the unified infrastructure. This enabled Gazprom to propose the State Oil Company of Azerbaijan Republic the most attractive commercial terms and conditions of gas purchase. Our partnership is logically consistent and fully meets our mutual interests. I am confident that in the coming years the volume of Azerbaijani gas supplied to Russia will increase and today’s contract will lay the foundation for the long-term strategic cooperation in the oil and gas sector between Gazprom and SOCAR.”

Background:

Azerbaijan holds up to 1.5 trillion cubic meters of proven natural gas reserves including the Shakh-Deniz field located in the Azerbaijani offshore sector of the Caspian Sea with recoverable reserves of more than 1.3 trillion cubic meters of natural gas.

Annual gas consumption in Azerbaijan accounts for 10–11 billion cubic meters.

On March 27, 2009 Gazprom and the State Oil Company of Azerbaijan Republic (SOCAR) signed the Memorandum of Understanding.

On June 29, 2009 Gazprom and SOCAR signed the Agreement on the Terms and Conditions for Azerbaijani natural gas purchase and sale.