The Board of Directors’ meeting is in progress at the Gazprom Headquarters.

The Board of Directors approved the work done surrounding the implementation of the Russian Regions Gasification Program in 2008.

The Gazprom Management Committee was authorized with furthering the gasification of the Russian regions in 2009, including the Russian Federation constituents in the Far Eastern and Siberian Federal Districts.

Background:

The Gasification of the Russian Federation regions is a prioritized business activity of Gazprom.

The Russian Regions Gasification Program provides for the following distribution of responsibility areas. Gazprom performs the construction of inter-settlement gas pipelines, using its own funds. The construction of street-level gas distribution networks, household-level networks, acquisition and installation of gas equipment is ensured by the administrative authorities of a constituent through attracting funds from the budgets of all levels, the local population and other sources. For the purpose of coordinating the activities of Gazprom and the administrative authorities of the Russian constituents involved in the Program, synchronization schedules for gasification facilities commissioning are signed.

Meeting the obligations assumed by the administrations in respect to the preparation of consumers for gas supply is one of the key factors while allocating the investments within the Gasification Program.

Between 2005 and 2007 Gazprom allocated RUB 43 bln for the Russian Regions Gasification Program implementation. As a result, the average level of natural gas supply in Russia totaled 62 per cent, including 67 per cent in cities and towns and 44 per cent in the rural area. In early 2005 the identical figures equaled 54, 61 and 36 per cent respectively.

The implementation of the Russian Regions Gasification Program between 2005 and 2007 had not only enabled to increase the average gasification level in Russia, but also revealed the necessity of continuing active efforts in this direction.

In 2008 Gazprom was planning to invest RUB 23.05 bln in the gasification of 64 Russian regions. At the same time, for the first time the Khanty-Mansiysk Autonomous Okrug, the Krasnoyarsk Krai, the Republic of Sakha (Yakutia), the Sakhalin Oblast and the Republic of North Ossetia-Alania were included in the Gasification Program. Based on the intermediate results the decision was taken to increase the amount of investments to RUB 24.18 bln. The regions, which eliminated the time gap with the 2006-2007 synchronization schedules, such as the Krasnodar Krai and the Novosibirsk Oblast, were entitled to extra funds for launching new gas pipelines.

In 2008 Gazprom had completed 153 gas pipelines with the total length of 2.7 thousand km in 47 Russian Federation constituents. It is projected that 2.5 thousand km of gas distribution networks will be connected to these gas pipelines. This will allow gasifying some 60 thousand of households and circa 300 boiler rooms. Taking into account the expanded gasification of population centers, the number of residential apartments and utilities connected to network gas will increase.

36 Russian Federation constituents ensured preparation of consumers for gas supply in line with the synchronization schedules for gasification facilities commissioning. The relevant activities were especially intensive in the Republic of Bashkortostan, the Bryansk, Vladimir, Kirov, Kursk, Orenburg, Smolensk, Tyumen and Yaroslavl Oblasts.

At the same time, it was detected that a number of regions were falling considerably behind the agreed schedules for the preparation of consumers to receive gas. This year the relevant obligations were not met in the Republic of Komi, the Volgograd, Voronezh, Kurgan, Leningrad, Lipetsk, Orel, Samara, Tomsk and Ryazan Oblasts. Moreover, the obligations surrounding consumer preparation in line with 2006-2007 synchronization schedules haven’t been met by the administrations of the Karelia and Komi Republics, the Archangelsk, Volgograd, Ivanovo, Kaliningrad, Kaluga, Kostroma, Kurgan, Lipetsk, Ryazan and Tver Oblasts.

As planned, Gazprom will allocate in 2009 RUB 18.5 bln to gasify Russian regions. Proposals were made to additionally include the Kamchatka and Primorsk Krais, the Jewish Autonomous Oblast and the Chechen Republic in the Program. Thus, the number of Russian constituents involved in the Gasification Program will reach 68.

The further Gazprom’s activity related to the regional gasification will be aimed at the level of gasification throughout Russia that will ensure maximum economic viability. At the same time, special attention will be paid to the gasification of Siberian and the Far Eastern regions. Gazprom is planning to further improve the cooperation with regional administrations aimed at loading the ready gas transportation capacities from the moment of their completion.