The Gazprom Management Committee reviewed the readiness of the Unified Gas Supply System (UGSS) for the 2007-2008 autumn/winter season.

The Meeting noted that the UGSS is generally prepared for the upcoming autumn/winter season.

During the preparation period for the winter of 2007-2008 the UGSS facilities were supplied with additional gas volumes to make up for gas collected during the last year. Commercial gas reserves created in UGSS facilities amount to 63.5 bcm of gas, an increase of 500 mcm of gas compared to the same period last year.

Average potential daily UGSS productivity over December to February has increased by 4.4 mcm to reach 492.4 mcm of gas, maximum potential daily productivity by the beginning of the take-off period will amount to 608 mcm which is 8 mcm more than last year.

For the autumn/winter period 2007-2008 gas production is expected to reach 294.7 bcm (147 bcm in 2nd Q 2007, and 147.7 bcm in 1st Q 2008).

Before the end 2007, the Company planes to put on stream GTU-10 of the Kharvutinskaya area at the Yamburgskoye field, the second train of the booster station at the Yubileinoye gas field, and to commission 142 additional wells.

During nine months of 2007, 74 gas treatment units, 70 booster compressor shops, 445 gas wells were overhauled in line with the schedule. Reinsulation of 1910.6 gas mains, capital repairs of 381 km of pipelines, overhaul of 125 underwater crossing pipelines, on-line inspection of 1101 underwater crossing pipelines and in-tube inspection of 12.8 thousand km of gas mains were conducted. 702 medium and capital repairs for gas compressor units at the compressor stations were implemented and 16 synchronized maintenance schedules were completed at the UGSS facilities.

Gas distribution facilities are prepared for winter period, regional gas distribution stations are inspected in line with the schedule. Currently, the Company’s gas distribution stations maintain over 514 thousand km of pipelines and provide gas for 84.2 thousand of the country’s population centers including 26 mln apartments, 35 thousand of boilers, nearly 16 thousand industrial and 167 thousand communal consumers.

The meeting particularly underscored that successful operation during the autumn/winter season, primarily in periods of bitterly cold temperatures and during peak gas takeoffs by consumers as in the previous years would mainly depend on build-up of back-up fuel reserves (fuel oil, coal an so on), regional gas consumption discipline and compliance with Schedule 1 at the power generation facilities, large industrial companies and consumers.

Within the frames of the bilateral Agreements signed between Gazprom and the Governments of the Russian Federation constituents, regional gas trading companies should more actively engage executive authorities in the aim of controlling storage and maintenance of the specified level of fuel reserves to prevent unmanageable situations in the gas supply sector.

Reference

To secure uninterrupted gas supply to the household sector, a schedule stipulating the conversion of Russian industrial consumers to standby energy sources (Schedule 1) is endorsed annually by regional authorities.

Schedule 1 is applied under Article 19 of the Regulations on Gas Supply in the Russian Federation, approved by the Russian Federation Government Directive # 162 from February 5 1998. Schedule 1 provides for a partial conversion of customers to standby energy sources (fuel oil, peat, coal etc.) under extremely low temperature to spare an amount of gas for meeting increased demand of the residential sector.

Conversion to backup fuels and their timely procurement is fixed in contracts with all industrial consumers.