The Gazprom headquarters today hosted a panel discussion “Russia’s Gas Industry: Strategic Guidelines and Development Priorities” as part of the forum “Fuel & Energy Complex of Russia in XXI century”.

Heads of the Company’s structural units delivered speeches at the panel discussion.

The speech of Oleg Aksyutin, Member of the Management Committee – Head of the Gas Transportation, Underground Storage and Utilization Department was devoted to the prospects of gas saving in Russia.

The speaker emphasized that the effective utilization of energy resources was a key factor in ensuring the competitiveness of various branches of Russia’s economy. Meanwhile, the energy capacity of Russia’s economy is much higher than the worldwide average level.

Oleg Aksyutin said that the share of natural gas in the fuel and energy balance of Russia was still at the level of over 50 per cent. At the same time, there is significant potential for growth in domestic gas saving.

In particular, a mere increase in performance of the gas-turbine power plants used for electric power generation to a worldwide average level of 40 per cent may save some

20 billion cubic meters of gas per annum. Over 70 billion cubic meters per annum may be saved by using up-to-date technologies in the housing and utilities sector.

Oleg Aksyutin drew the attention of the audience to the fact that energy saving was becoming one of the top priorities for the Russian economy. “Gazprom Group considers gas saving an important objective and makes efforts to reach it. Thus, the implementation of corporate energy saving programs allowed Gazprom to save a total of 20.8 billion cubic meters of gas in 2002-2008,” said the speaker.

Another important issue addressed at the panel discussion was the prospects for the gas industry development in Eastern Siberia and the Far East.

Nail Gafarov, Deputy Head of the Company’s Gas, Gas Condensate and Oil Production Department told about the shaping of Gazprom’s mineral resources base in the region as part of the Eastern Program implementation. In particular, Gazprom is carrying out geological exploration in the Krasnoyarsk Krai and Irkutsk Oblast; the Company is getting ready for the startup of similar work in the Republic of Sakha (Yakutia), Kamchatka Krai and offshore the Sakhalin Island.

The speaker said that Gazprom, in pursuance of the Russian Federation Government decisions made during the visit to Vladivostok on September 1, 2008, had submitted the applications to Rosnedra for the right to use subsurface resources in the Kirinsky, Vostochno-Odoptinsky and Aiyashsky blocks of the Sakhalin III project and the Zapadno-Kamchatsky area located offshore the Okhotsk Sea for the effective development of gas supplies in eastern Russia in the long run.

The issue of the gas industry development in eastern Russia was continued by Viktor Timoshilov, Head of the Eastern Projects Coordination Directorate. He noted that the practice of the Eastern Program implementation had shown that integrated state support was required for the gas industry development within the established timeframe. In particular, this support should be rendered in the form of timely licensing of subsurface resources, and mainly the Sakhalin III project and Zapadno-Kamchatsky area blocks, streamlining of the taxes on the gas industry in eastern Russia, regulatory framework for trunkline gas transport, customs regulation, stimulation of gas market development, etc.

Elena Karpel, Head of the Gazprom Economic Expert Analysis and Pricing Department addressed the issue of pricing in the domestic gas market. In particular, she said that in 2000-2008 the domestic market had not been profitable for Gazprom. Natural gas export had been the main source of the Company’s income.

In addition, while the gas prices and the volume of international market sales go down due to the ongoing economic crisis, we can not rely upon getting the bulk of income from export activities. In this regard Elena Karpel noted that it was important for the Russian Federation Government to take a balanced attitude to the issue of adjusting the parameters of gas prices upsurge in 2010-2011.

“An economically reasonable level of domestic gas prices is of utter importance for further development of the national gas industry, reliable gas supply to consumers, placement of Gazprom’s large orders with domestic enterprises, gasification of Russian regions and Russia’s energy security,” she said.