Alexander Ananenkov, Deputy Chairman of the Gazprom Management Committee held in Vladivostok a meeting on the Kamchatka Krai gasification development.

Participating in the meeting were heads and experts from Gazprom's specialized structural units and subsidiary companies: Gazprom invest Vostok, Gazprom mezhregiongaz, Gazprom transgaz Tomsk, Gazprom komplektatsiya, Giprogaztsentr, Gazprom gaznadzor as well as contracting agencies.

During the meeting Alexander Ananenkov emphasized that the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline commissioned this September had become a basis for further developing the regional gas supply system. Natural gas utilization will enhance the Kamchatkan energy sector reliability and efficiency, create necessary conditions for upgrading the obsolete energy equipment. The increased gas share in the fuel and energy mix of the Krai will provide for additional incentives for the region's comprehensive development, both economically and socially.

Gazprom proceeds with the consistent and phased gasification of Kamchatka. Currently, the design and exploration work is underway, which aims at constructing two inter-settlement gas pipelines for supplying gas to CHPP-1, a local hospital, the 11th kilometer boiler plant No.1 and other facilities of Petropavlovsk-Kamchatsky.

Following the meeting, Gazprom's specialized subdivisions were tasked to timely implement the Company's projects in the Kamchatka Krai.

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 Government as the Program execution coordinator. The following new gas production centers will be created in Eastern Russia: the Krasnoyarsk, Irkutsk, Yakutsk, Kamchatka and Sakhalin centers.

In September 2007 the Russian Government also adopted the decision prescribing Gazprom to join the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project.

As part of the project implementation Gazprom is performing production drilling and pre-development of two fields, Kshukskoye and Nizhne-Kvakchikskoye, on the west coast of the Kamchatka Peninsula. The gas production from the Kshukskoye and Nizhne-Kvakchikskoye fields is expected to total 750 million cubic meters a year.

Gazprom promptly built and in 2010 commissioned the Sobolevo – Petropavlovsk-Kamchatsky gas pipeline in order to supply gas to the consumers in the Kamchatka Krai. The gas pipeline is 392 kilometers long and its throughput capacity is up to 750 million cubic meters of gas a year.

Gazprom and the Kamchatka Krai Government entered into the Gasification Accord in January 2008, and into the Cooperation Agreement in February 2009.

The gasification level in the Kamchatka Krai had been below 1 per cent before the implementation of the gas supply project by Gazprom. Natural gas in the amount of 9 million cubic meters a year was delivered by Kamchatgazprom (not included in Gazprom Group) to the settlements of Sobolevo and Ustyevoye on the west coast of Kamchatka from the Kshukskoye field. Gazprom's activity will allow increasing the Kamchatka Krai gas penetration level. Since 2009 Kamchatka has been included into the Russian Regions Gasification Program.

CHPP-2 of Petropavlovsk-Kamchatsky became the main gas consumer on the Peninsula at the initial stage. In order to supply gas to CHPP-2, Gazprom has built a 15 kilometer long two-string inter-settlement gas pipeline from the automated gas distribution station (AGDS) of Petropavlovsk-Kamchatsky to CHPP-2. Further on, the Company is planning to convert CHPP-1 of Petropavlovsk-Kamchatsky to gas and gasify the Kamchatka Krai settlements located along the gas pipeline route.