Today drilling of the first production gas well was launched in the Nizhne-Kvakchinskoye gas condensate field (GCF) located near the settlement of Sobolevo on the western coast of the Kamchatka Peninsula. The drilling operations are a part of the Gas Supply to the Kamchatka Oblast, Phase 1 – Gas Supply to Petropavlovsk-Kamchatsky project.

Participating in the event were representatives from Gazprom Administration and subsidiary companies – Gazprom invest Vostok, Burgaz, Gazprom promgaz and from the Kamchatka Krai Administration.

It was pointed out that the current event was preceded by a large scope of logistics and engineering work done by Gazprom and its subsidiaries.

The launch of the first well drilling in the Nizhne-Kvakchinskoye GCF became a crucial step towards execution of the Gas Supply to the Kamchatka Krai project that will influence significantly the socio-economic development both of this region and the entire Russia’s Far East for the coming decades.

The launch of drilling is a vivid demonstration of the fact that Gazprom timely executes each and every decision of the Russian Government.

Background:

The state policy of shaping the gas industry in Eastern Russia is outlined in 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 approved by the Russian Federation Government on June 15, 2007 and by the Energy Ministry Order No. 340, dated September 3, 2007. Gazprom was appointed as the Program execution coordinator.

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

As part of the project Gazprom is pre-developing the Kshukskoye and Nizhne-Kvakchinskoye gas condensate fields on the western coast of the Kamchatka Peninsula and is constructing the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline projected for commissioning in 2010. The project also stipulates developing gas distribution networks in Petropavlovsk-Kamchatsky.

In 2008 Gazprom allocated RUB 1.1 billion and RUB 4.8 billion for the pre-development of the fields and for the construction of the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline. The 2009 Program stipulates that RUB 0.8 and 11.8 billion will be committed for the same purposes as well as RUB 1.4 billion for production drilling.

The wells construction for the Kshukskoye and Nizhne-Kvakchinskoye fields is being carried out by Burgaz – Gazprom’s 100 per cent subsidiary dealing with prospecting, exploration and production wells construction.

Over 2009 to 2011 Burgaz is going to drill a total of 12 production wells in the Nizhne-Kvakchinskoye GCF under complicated geological conditions. Drilling technologies are selected for each well individually. The drilling process provides for a whole range of environmental measures complying with the relevant standards of environmentally friendly operations.

Production drilling in the Kshukskoye GCF is planned to be commenced this year.