The Gazprom Board of Directors took notice of the information on the current state and the progress with the South Stream gas pipeline construction.

The meeting participants underlined that the project was progressing on schedule. Commissioning of the first string of the gas pipeline is scheduled for late December 2015.

The Gazprom Management Committee was instructed to continue its cooperation with foreign partners on preparation of front-end engineering and design documents in order to make a final investment decision on the South Stream project.

The Board of Directors tasked the Management Committee to report in the fourth quarter of 2012 on the progress with the project implementation.

Background

With a view to diversify the natural gas export routes Gazprom is implementing the project for construction of a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project.

Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria in order to implement the onshore gas pipeline section.

On September 16, 2011 the South Stream Transport AG shareholders signed the Agreement for the offshore section of the South Stream project. Pursuant to the Agreement, the stakes in the South Stream project offshore section were distributed as follows: Gazprom – 50 per cent, Italian Eni – 20 per cent, German Wintershall Holding and French EDF – 15 per cent each.

In the third quarter of 2011 the Consolidated Feasibility Study of South Stream was finalized and included the feasibility study on the offshore section and feasibility studies on the respective gas pipelines in the host countries of Southern and Central Europe.

The Consolidated Feasibility Study contains key engineering solutions including their substantiation, environmental safety assessment and environmental measures, economic efficiency evaluation including capital and operational expenditures.

The Feasibility Study lays the foundation for further elaboration of project documents for the gas transmission facilities designed to supply Russian natural gas to Central and Southern Europe via the South Stream gas pipeline.