The Gazprom headquarters hosted a joint meeting of the working group of Gazprom and the Republic of Sakha (Yakutia) Government. The meeting was moderated by Viktor Timoshilov, Head of the East-Oriented Project Coordination Directorate and Gennady Alexeev, First Deputy Chairman of the Republic of Sakha (Yakutia) Government.

The meeting participants discussed the progress in creating a large gas production center in Yakutia pursuant to the protocol of the meeting between Gazprom and the Republic of Sakha (Yakutia) Government dated March 12, 2010, and the action plan of the joint working group for 2011–2013. In particular, the parties addressed the issues of the Investment Rationale for the Chayandinskoye oil, gas and condensate field pre-development, gas transmission and processing; progress with geological exploration of the Chayandinskoye field, design and survey work for the projected Yakutia – Khabarovsk – Vladivostok gas trunkline; the issues of the regional transport and power supply infrastructure advancement required to pre-develop Chayandinskoye and the neighboring fields.

It was emphasized that as a result of the geological exploration work performed between 2010 and 2011, Gazprom had increased C1 gas reserves of the Chayandinskoye field by 251.3 billion cubic meters. The joint working group noted that in order to further improve the feedstock base of the Yakutia gas production center, it was important to hand four oil, gas and condensate fields in the Republic over to Gazprom as soon as possible.

Special attention was paid to the joint efforts required to substantiate the decision related to the state support measures on the federal and regional levels in order to develop the gas industry in Eastern Russia, particularly in Yakutia. In this regard, it was stressed that a differentiated approach was demanded when calculating the rate of the severance tax (including the zero rate during the investment payback period) on gas production in the region, introduction of income and property tax benefits, reduction or abolition of import tax duties on equipment having no analogs manufactured in Russia and intended for use during gas projects delivery in Yakutia.

In addition, the joint working group noted the success in implementing the Agreement between the Republic of Sakha (Yakutia) and Gazprom on cooperation in the field of regional socioeconomic development during the Eastern Gas Program execution.

Background

As part of the Eastern Gas Program, new gas production centers will be created in Eastern Russia, including Yakutia.

The Chayandinskoye oil, gas and condensate field with the subsurface use license held by Gazprom, is the cornerstone for the Yakutia gas production center. The field is located in the Lensk District, Republic of Sakha (Yakutia). C1+C2 reserves of the field make up 1.3 trillion cubic meters of gas (including 631.1 billion cubic meters of C1 reserves), recoverable oil and condensate reserves – 79.1 million tons.

The Chayandinskoye field oil rim and gas deposits development operations are scheduled for 2014 and 2016, respectively. The Yakutia – Khabarovsk – Vladivostok gas transmission system is to be created to convey the produced gas.

At present, drilling of the exploratory wells is underway, engineering studies on the pre-development and gas transmission infrastructure facilities are nearing completion. Thorough consideration has been given to the optimal route of the gas trunkline. The logistics scheme of cargoes and personnel transportation has been defined.

The Company is compiling the Investment Rationale for the Chayandinskoye field pre-development, gas transmission and processing. The document tackles the issues of arranging gas supply and gasification of consumers in southern Yakutia, ensuring export supplies in conjunction with advancement of the Sakhalin gas production center and the Sakhalin – Khabarovsk – Vladivostok gas transmission system, as well as the issues of gas processing facilities layout.

Involvement of all gas resources of the region will play a significant role in effective development of the Yakutia gas production center and optimal loading of the Yakutia – Khabarovsk – Vladivostok gas transmission system. Therefore, Gazprom has filed an application with the Federal Subsurface Use Agency to receive the rights to use the subsurface resources of the Tas-Yuryakhskoye and Verkhnevilyuchanskoye fields listed as the field of federal significance. Moreover, with a view to develop gas supply and gasification of the central regions in the Republic of Sakha (Yakutia) and to maintain gas production volumes in the Yakutia gas production center in the long run, applications have been filed for the Srednetyungskoye and Sobolokh-Nedzhelinskoye gas and condensate fields.