Petropavlovsk-Kamchatsky hosted a working meeting between Alexander Ananenkov, Deputy Chairman of the Gazprom Management Committee and Alexey Kuzmitsky, Governor of the Kamchatka Krai and Chairman of the Krai Government as part of the business trip made by the Company’s expert group to the Kamchatka Krai.

The parties addressed the progress with the Cooperation Agreement and the Gasification Accord entered into by Gazprom and the Kamchatka Krai Government.

Special attention was paid to the Gasification of the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky investment project. Alexander Ananenkov and Alexey Kuzmitsky highly appreciated the cooperation between Gazprom and the Kamchatka Krai Government aimed at the regional gas supply development. It was noted that the Kamchatka Krai Government prepared regional consumers for gas supply in strict compliance with the schedule.

Alexander Ananenkov and Alexey Kuzmitsky visited the construction facilities of the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline, CHPP-2 and the gas lateral from the automated gas distribution station of Petropavlovsk-Kamchatsky to CHPP-2. The parties noted a high pace of construction work and expressed their confidence that the work would be finished on schedule.

Background:

In September 2007 the Russian Federation Government adopted the decision prescribing Gazprom to get involved in the Gasification of the Kamchatka Oblast. Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project.

Within the project, Gazprom is developing the infrastructure of the Kshukskoye and Nizhne-Kvakchikskoye fields located on the western coast of the Kamchatka Peninsula, as well as constructing of the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline to be commissioned in 2010. The total length of the trunkline route is 392 kilometers. Production drilling and pre-development operations are underway in the Kshukskoye and Nizhne-Kvakchikskoye fields.

The Gasification Accord was entered into between Gazprom and the Kamchatka Krai Government in January 2008, the Cooperation Agreement – in February 2009.

Since 2009 the Kamchatka Krai has been involved in the Russian Regions Gasification Program. As part of the Program, the Gazprom-sponsored construction of the gas lateral from the automated gas distribution station of Petropavlovsk-Kamchatsky to CHPP-2 will be completed in 2010. In its turn, the Kamchatka Krai Government will simultaneously arrange CHPP-2 conversion to natural gas.

The Kamchatka Krai gasification level is below 1 per cent (liquefied natural gas is not supplied). Natural gas is delivered to the settlements of Sobolevo and Krutogorovsky on the western coast of Kamchatka from the Kshukskoye field in the amount of 9 million cubic meters per year.

Kamchatgazprom (in which Gazprom is seeking to acquire the 92.25 per cent stake held by the Federal Government) is currently dealing with gas production and transportation in the region.