Gazprom's expert group led by Alexander Ananenkov, Deputy Chairman of the Company's Management Committee took a regular business trip to the Far East.

The experts visited a number of Far Eastern gas supply and gasification facilities under construction, particularly in the Sakhalin Oblast and Primorsky Krai.

Alexander Ananenkov held a working meeting with Sergey Darkin, Governor of the Primorsky Krai. The parties discussed the progress with the Sakhalin – Khabarovsk – Vladivostok gas transmission system (GTS) construction including preparation of the consumers for gas supply. The meeting also addressed creation of gas and chemicals liquefaction and compression facilities in the Primorsky Krai.

Alexander Ananenkov held a meeting in Vladivostok devoted to constructing Gazprom's facilities to perform a state task of arranging gas supply to the Far Eastern consumers and to the 2012 APEC Summit facilities starting from 2011.

Taking part in the meeting were heads and experts from Gazprom's specialized subdivisions and subsidiaries: Gazprom invest Vostok, Gazprom mezhregiongaz, Gazprom transgaz Tomsk, Gazprom komplektatsiya, Giprogaztsentr, Gazprom gaznadzorand contracting agencies.

Alexander Ananenkov stressed that the Sakhalin – Khabarovsk – Vladivostok GTS construction was at its final stage. The GTS is the first interregional gas transmission project in the Far East that will lay the basis for the regional gas supply and gasification development. 1,100 out of 1,350 kilometers of the linear part, envisaged by the first start-up complex, have been welded. Gas pumping equipment is being installed at the Sakhalin main compressor station and the foundation is being prepared for the shift workers housing.

The gasification program facilities are being constructed in parallel with trunkline gas transmission facilities. The project for an inter-settlement gas pipeline from the gas distribution station (GDS) being built in Vladivostok to the Russky Island consumers with a gas lateral to CHPP-2 of Vladivostok is ongoing in order to supply the APEC Summit facilities with gas. In particular, the gas pipeline route will cross the Eastern Bosphorus Strait where the directional drilling of wells is underway for the underground two-string crossing. The selected method doesn't disrupt navigation and has no environmental impact on the Strait ecosystem.

Commissioning of the Sakhalin – Khabarovsk – Vladivostok GTS first start-up complex and the inter-settlement gas pipeline to the Russky Island will allow initiating gas supplies to the Primorsky Krai consumers in the third quarter of 2011 in strict compliance with the tasks set by the Russian President and Government.

The meeting participants paid particular attention to the gas supply arrangement in the Sakhalin Oblast giving consideration to the gas lateral construction from the Sakhalin II project gas pipeline system, the Dalneye GDS and the inter-settlement gas pipeline to the CHPP-1 in Yuzhno-Sakhalinsk whose linear part currently undergoes testing. Commissioning of these facilities and the first gas supplies are scheduled for the first quarter of 2011.

Based on the meeting results, specialized subdivisions and subsidiaries of Gazprom as well as contracting agencies were tasked to ensure a rapid pace of construction and installation activities.

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.

In September 2007 the Russian Federation Industry and Energy Ministry's Order 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 gives priority to the creation and development of the Sakhalin – Khabarovsk – Vladivostok gas transmission system. Launched in July 2009, the GTS construction is targeted at developing gas supplies to the Khabarovsk Krai and the Sakhalin Oblast as well as arranging gas deliveries to the Primorsky Krai. The 1,350-kilometer first start-up complex of the gas pipeline with the annual capacity of 6 billion cubic meters is to be brought onstream in the third quarter of 2011. In parallel, the work is being done to gasify the Sakhalin Oblast and, inter alia, to convert CHPP-1 in Yuzhno-Sakhalinsk to natural gas.