In furtherance of the accords reached earlier Alexey Miller, Chairman of the Gazprom Management Committee and Jiang Jiemin, President of China National Petroleum Corporation signed today in Beijing, as part of the official visit to China by Russian President Dmitry Medvedev, the Extended Major Terms of Natural Gas Supply from Russia to China.

The document sets the key commercial parameters of the forthcoming natural gas delivery to the PRC market via the “western” route: the volumes and the timeframe for export startup, the take-or-pay level, the supplies buildup period, the guaranteed payment level. The document is of a legally binding nature.

The export contract is expected to be signed in mid 2011. First supplies are planned for late 2015. Under the reached agreements the contract period will be up to 30 years and the supply volume – 30 billion cubic meters a year.

In addition, Alexey Miller and Jiang Jiemin signed a Protocol based on the results of the gas processing and gas chemistry projects feasibility study carried out jointly by Gazprom and CNPC. The document considers the opportunities to create gas chemical facilities in Russia related to arranging natural gas exports from Russia to China.

Background:

China National Petroleum Corporation is the largest state-owned petroleum company in China (the Government holds a 100 per cent stake) and is one of the world’s leading integrated oil and gas production companies.

Gazprom and CNPC signed the Agreement of Strategic Cooperation on October 14, 2004. The Agreement covers a wide range of joint businesses including examination of the issues relative to the arrangement of natural gas delivery from Russia to China by Gazprom. The opportunities for joint gas processing and gas chemistry projects in eastern Russia are also being examined in parallel with those in third countries.

In June 2009 the Governments of Russia and China signed the Memorandum of Understanding for cooperation in the natural gas sector.

In October 2009 Gazprom and CNPC inked the Framework Agreement on major terms and conditions for natural gas supply from Russia to China. In December 2009 Basic Major Terms of Gas Supply from Russia to China were signed.

In March 2010 Gazprom and CNPC entered into the Agreement on the feasibility study for gas processing and gas chemistry projects.