Alexey Miller, Chairman of the Gazprom Management Committee and Valery Serdyukov, Governor of the Leningrad Oblast signed today the Cooperation Agreement for 2011 between Gazprom and the Leningrad Oblast Government.

The document defines the regional gas supply system development and construction of the Gryazovets – Vyborg gas pipeline in the Oblast as the key areas of interaction.

Pursuant to the document signed, Gazprom and the Leningrad Oblast Government will continue with the target programs on building the new and retrofitting the existing heat supply systems. The Company will allocate RUB 680 million for these purposes.

The parties will continue efforts on wider utilization of natural gas as a transport fuel.

The Leningrad Oblast Government will ensure full payment for the current gas supplies to budget-sponsored consumers, preparation of new consumers for gas supplies according to synchronization schedules for gasification facilities construction as well as installation of gas metering devices.

The Government will provide tax exemptions and other benefits stipulated by law to the companies participating in gasification programs and construction of heat supply facilities. Gazprom and its subsidiaries will be assisted in the land allocation issues.

According to the agreements reached at the meeting, the Leningrad Oblast facilities financing will be doubled in 2011 to RUB 500 million as part of Gazprom's Gasification Program. At the same time, the Oblast assumed the obligation to put up the same amount for its part of gasification activities.

Valery Serdyukov highlighted an intensively developing cooperation with Gazprom's oil subdivision that covers, among other things, the expansion of filling stations, while the necessary land plots have been parceled out in the Leningrad Oblast for the construction of these filling stations. The Governor proposed not to be satisfied by what had been achieved and to consider the options for Gazprom neft's headquarters location in the Leningrad Oblast. The suggested areas included the vicinity of the Demidov's Chateau, the Vantovy Bridge (near the Ring Road), Kudrovo (near the Ring Road) and Novoye Devyatkino. Moreover, according to Valery Serdyukov, within its authority the Oblast is ready to provide exclusive operating terms to Gazprom neft in line with the Law on Investment Benefits in the Leningrad Oblast.

Background:

Gazprom and the Leningrad Oblast Government signed the five-year Cooperation Agreement in April 2003 with the Supplementary Agreement extending it for an indefinite period of time signed in February 2008.

Between 2003 and 2009 Gazprom committed RUB 3.3 billion for the Leningrad Oblast gasification that allowed increasing the regional gasification level by 8.2 per cent. The current gasification level of the Leningrad Oblast averages 58.1 per cent including 72.4 per cent in cities and towns and 32.7 per cent in the rural area. The identical figures throughout Russia average 63.2, 67.5 and 45.5 per cent respectively.

In 2010 the Company invested RUB 80 million in the Oblast gasification.

The Gryazovets – Vyborg gas trunkline (length – 900 kilometers, annual design capacity – 55 billion cubic meters) is intended for securing gas deliveries from the Unified Gas Supply System to the Nord Stream gas pipeline and supplying consumers of Russia's Northwestern region. The gas pipeline crosses the Vologda and Leningrad Oblasts. By now, the linear part of the gas pipeline has been completed. The pipeline will be commissioned in a stagewise manner starting from 2011. The nominal capacity of the gas pipeline is to be achieved by late 2012.