A group of Gazprom's experts led by Alexander Ananenkov, Deputy Chairman of the Company's Management Committee, started another business trip to the Far East.

Today, Gazprom's experts arrived in Sakhalin and visited the construction facilities of the Dalneye gas distribution station (GDS) located in the city of Yuzhno-Sakhalinsk and the gas lateral from the Sakhalin II project pipeline system.

Alexander Ananenkov held in Yuzhno-Sakhalinsk a meeting dedicated to the progress with natural gas supply to the Sakhalin Oblast. Taking part in the meeting were Alexander Poleschuk, Deputy Plenipotentiary Envoy of the Russian President to the Far Eastern Federal Okrug, Yaroslav Golko, Member of the Management Committee – Head of the Investment and Construction Department of Gazprom, heads and experts from Gazprom's specialized subdivisions and subsidiaries: Gazprom invest Vostok, Gazprom mezhregiongaz, Gazprom komplektatsiya, Giprogaztsentr, Gazprom gaznadzor as well as contracting agencies.

Opening the meeting, Alexander Ananenkov emphasized that Gazprom, as the Eastern Gas Program coordinator gave priority to supplying Russian consumers with natural gas. Therefore, in parallel with gas trunklines construction in the Far East, the Company was taking large-scale actions on building regional gas supply systems in the Sakhalin Oblast among others.

By now, the linear part of the gas lateral from the Sakhalin II project pipeline system to the Dalneye GDS has been constructed and the linear part of the inter-settlement gas pipeline to the Yuzhno-Sakhalinsk CHPP-1 is being tested in the region. Simultaneously, the work is underway to convert the CHPP to natural gas. Equipment installation operations are nearing completion and startup activities are being arranged at the Dalneye GDS. It is planned to finish constructing the inter-settlement gas pipeline to CHPP-1 and the Dalneye GDS in the first quarter of 2011.

Moreover, Gazprom is preparing design and estimate documentation for gas laterals construction from the Sakhalin II project pipeline system to the settlement of Makarov and the town of Nogliki (including an inter-settlement gas pipeline to the settlement of Nysh, Nogliki District and a lateral to the Nogliki CHPS). The design and estimate documentation is also being developed for the construction of an inter-settlement gas pipeline from the Dalneye GDS to the Novo-Alexandrovsk district of Yuzhno-Sakhalinsk and further on – to the population centers of Klyuchi, Sinegorsk and Sanatornoye.

The meeting addressed pre-development of the Kirinskoye gas and condensate field, and construction of a gas lateral from the onshore processing plant to the Sakhalin main compressor station.

After the meeting, assignments were given to timely perform the activities aimed at supplying gas to the Sakhalin Oblast and developing the Company's production base offshore the Sakhalin Island.

Background:

Gazprom's expert groups take regular trips to the Far East. A group is made up of top managers from the Company, its specialized subdivisions, subsidiaries and contracting agencies. The trips are primarily aimed at securing timely execution of the projects for shaping the Unified Gas Supply System in Eastern Russia on the basis of the Company's resource base.

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 stipulates prioritized construction and development of the Sakhalin – Khabarovsk – Vladivostok gas transmission system. In parallel, the work is being done to gasify the Sakhalin Oblast.

The Kirinskoye gas and condensate field will be a source of gas for the Sakhalin – Khabarovsk – Vladivostok GTS. Discovered in 1992, the field is located within the Kirinsky block of the Sakhalin III project offshore the Sakhalin Island (Sea of Okhotsk). The Kirinskoye field ABC1+C2 reserves amount to 100 billion cubic meters of gas and 11.4 million tons of gas condensate.