Gazprom and the Government of the Kyrgyz Republic approved a Stepwise Program for the geological survey of subsurface resources in Kugart and Eastern Mailu-Suu IV areas of Kyrgyzstan.

The Program was elaborated within the Agreement on common principles for the geological survey of subsurface resources in the promising oil and gas areas of the Kyrgyz Republic signed between Gazprom and the Government of the Kyrgyz Republic on May 14, 2007.

The Program provides for stagewise geological structure investigation, prospecting and exploration drilling, as well as geological survey of subsurface resources within the Kugart license area and the Eastern Mailu-Suu IV block from 2008 to 2011.

Background:

In May 2003 Gazprom and the Government of the Kyrgyz Republic signed a long-term Agreement of Cooperation in the gas industry for the term of 25 years in order to establish a legal framework for strategic cooperation.

In particular, the Agreement provides for:

• exploration; development and operation of hydrocarbon fields in the Kyrgyz Republic;
• upgrading, construction and operation of gas trunklines and other gas industry infrastructure facilities in the Kyrgyz Republic;
• gas transportation and supply for the implementation of joint projects.

In January 2004 a Plan for top-priority joint actions by Gazprom and the Government of the Kyrgyz Republic for the implementation of the above mentioned Agreement was approved.

In January 2006, Gazprom and the Government of the Kyrgyz Republic signed a Memorandum of Intent to establish a joint Russian-Kyrgyz venture in the oil and gas industry.

In May 2007 Gazprom and the Government of the Kyrgyz Republic signed an Agreement on common principles for the geological survey of subsurface resources in order to lay the cornerstone (form a resource base) for the joint venture operation.

In February 2008 Gazprom was granted licenses for geological survey of subsurface resources in the promising oil and gas areas of Kugart and Eastern Mailu-Suu IV.

The proven reserves of natural gas in Kyrgyzia are estimated at 6 bcm. The development of natural gas fields is hindered by the geologic peculiarities and insufficiently developed infrastructure. Domestic production of natural gas in the Republic totals some 30 mcm per annum. The forecasted production will reach 40 mcm by 2010.