Alexander Ananenkov, Deputy Chairman of the Management Committee has convened at the Gazprom Headquarters a meeting dedicated to the natural gas supply to the regions of the Far East and the Kamchatka Krai.

Participating in the meeting were Vasily Podyuk, Member of the Management Committee, Head of the Gas, Gas Condensate and Oil Production Department, Yaroslav Golko, Member of the Management Committee, Head of the Investment and Construction Department, Boris Posyagin, Head of the Central Production and Dispatch Department, heads and experts of the Gazprom’s Administration core business units and as well as heads of the following subsidiaries – Gazprom invest Vostok, Mezhregiongaz, Promgaz, Giprogazcenter, and Giprospetsgaz.

The meeting members discussed essential issues on gas supply to the Primorsky, Khabarovsk and Kamchatka Krais, as well as the Sakhalin Oblast. The meeting summarized the results of the working visit of Gazprom experts to the Far East regions held July 6 to 13.

The meeting considered the progress in implementing a top-priority project within the Eastern Gas Program – the construction of the Sakhalin – Khabarovsk – Vladivostok gas transmission system. It was noted that the engineering of the gas transmission system facilities required to start the construction in 2009 and the gas supply to Vladivostok in 2011, was underway in line with the schedule.

The participants of the meeting paid a special attention to providing a resource base to the Sakhalin – Khabarovsk – Vladivostok gas transmission system. Meanwhile, it was emphasized that the major gas source for the gasification of the Primorsky and Khabarovsk Krais and Sakhalin Oblast at the first phase was the Sakhalin-1 project. The resources of the Sakhalin-3 project blocks will play a decisive role in the further development of the gas transmission system.

The meeting also addressed the progress in implementing the Kamchatka Krai gasification project providing for the construction of Sobolevo – Petropavlovsk-Kamchatsky gas pipeline, as well as the development of Kshukskoye and Nizhne-Kvakchikskoye fields. The project is being implemented in line with the schedule. First natural gas supplies to the consumers in Petropavlovsk-Kamchatsky will commence in Quarter 4, 2010.

In addition, the meeting summed up the preliminary results of mobilization and deployment of construction and installation units at a number of sections of the gas pipeline construction route.

Until the end of the current year it is planned to accomplish the development of the General Gas Supply and Gasification Scheme for the Kamchatka Krai. Commercial talks with the consumers in order to agree upon the conditions of gas supply will be held, and long-term natural gas supply contracts will be concluded with power generating companies operating in the region. In particular, the preliminary conditions for the natural gas supply to the Kamchatskenergo facilities were discussed. Starting from 2009 the Kamchatka Krai will be included in the Russian Regions Gasification Program, and the engineering and construction of gas distribution networks in the Krai will be launched.

According to the meeting results, Gazprom’s core business units and subsidiaries were entrusted with ensuring timely implementation of the projects for natural gas supply to the Far East regions.

Background:

The September 2007 Order by the Russian Federation Industry and Energy Ministry approved the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program). Gazprom was appointed by the Russian Federation Government as the Program execution coordinator.

The Eastern Gas Program prioritizes, inter alia, constructing and developing the Sakhalin –Khabarovsk –Vladivostok gas pipeline system to be connected with the Yakutia –Khabarovsk –Vladivostok gas pipeline in future.

According to the order of the Russian Federation Government and the decision of the Board of Directors, Gazprom is working to establish the Sakhalin –Khabarovsk –Vladivostok gas transmission network in order to promote the gasification of the Khabarovsk Krai and Sakhalin Oblast, as well as to arrange gas supply to the Primorsky Krai in 2011 at the latest.

In September 2007 the Russian Federation Government adopted the decision prescribing Gazprom to get involved in the project on Gas Supply to the Kamchatka Oblast, Phase 1 –Gas Supply to Petropavlovsk-Kamchatsky, and gave specific instructions on the relevant issues within the project. The gas pipeline was requested to be completed in 2010.

The project envisages developing a number of small gas condensate fields on the western coast of the Kamchatka Peninsula (Kamchatgazprom holds the relevant development licenses), and constructing the Sobolevo –Petropavlovsk-Kamchatsky gas main, as well as distribution networks in Petropavlovsk-Kamchatsky.

Gazprom invest Vostok (a fully owned subsidiary of Gazprom) was assigned the customer of investment projects implementation for the construction of Sakhalin –Khabarovsk –Vladivostok, Yakutia –Khabarovsk –Vladivostok, as well as Gas Supply to the Kamchatka Oblast, Phase 1 –Gas Supply to Petropavlovsk-Kamchatsky trunklines.