The Gazprom Management Committee has considered the readiness of the Unified Gas Supply System (UGSS) facilities for the period of peak loads during the autumn/winter period of 2009–2010, as well as the measures required to ensure uninterrupted gas supplies to Russian consumers over the winter period in the long-term perspective.

The meeting noted that the UGSS was generally ready for the forthcoming autumn/winter period.

Heads of Gazprom’s subsidiary companies and organizations were tasked to timely complete the major activities aimed at preparing facilities for the 2009–2010 autumn/winter operation, as well as the programs to reconstruct and overhaul gas production, transmission, underground storage and processing facilities.

Gazprom’s specialized subdivisions were entrusted with compiling the materials required to consider this issue at the Board of Directors meeting.

It was emphasized at the meeting of the Company’s Management Committee that successful operation in the autumn/winter period, especially during low temperature spells and peak gas consumption, would largely depend on the availability of backup fuel reserves (fuel oil, coal, etc.) at power generation facilities and large industrial enterprises, as well as on the regional gas consumption discipline and compliance with Schedule 1.

Background:

During preparation for the 2009–2010 winter period underground gas storages (UGS) have been replenished with the same gas volume as was withdrawn during the last autumn/winter period. Marketable gas reserves held in UGS make up 64 billion cubic meters, identical to the amount of the same period in 2008.

During the 2009–2010 autumn/winter period gas production is projected to reach 289.2 billion cubic meters. Meanwhile, 261.6 billion cubic meters were produced over the identical period of 2008–2009.

All the selected gas treatment units at the upstream facilities undergone preventive maintenance, 74 booster compressor shops were fully repaired, 387 wells were overhauled and 55 wells were commissioned as of October 1, 2009. In particular, new wells were put onstream at the Orenburg and Yuzhno-Russkoye fields.

Over nine months of the current year 1,574 kilometers of gas trunklines were reinsulated, gas pipelines were overhauled (369 kilometers of pipes replaced), 602 submerged crossings were investigated (81 repaired), in-line inspection of 12.6 thousand kilometers of gas pipelines was performed, 668 gas pumping units were refurbished and 53 kilometers of technological pipelines at compressor stations were comprehensively repaired. In total, 16 sets of scheduled maintenance operations were implemented at UGSS facilities.

In accordance with the winterization schedule, gas distribution networks of regional gas distribution companies were prepared for the winter period. At present, the subsidiary and affiliated gas distribution companies of the Gazprom Group maintain 586.85 thousand kilometers of gas pipelines, 39 thousand boiler houses, over 17.6 thousand industrial consumers and 198 thousand household consumers.

In accordance with the approved schedule, all the CNG filling stations run by Gazprom are being prepared for the autumn/winter period.

To secure uninterrupted gas supply to the residential and utility sectors, a schedule of converting Russian industrial consumers to backup fuels (Schedule 1) is endorsed annually by regional authorities.

Schedule 1 is applied under Article 19 of the Regulations on Gas Supply in the Russian Federation, approved by the Russian Federation Government Directive No. 162 dated February 5, 1998. Schedule 1 stipulates partial conversion of industrial consumers to backup fuels (fuel oil, peat, coal, etc.) under abnormally low temperatures in order to save a certain amount of gas and to use it for meeting increased demand of the residential and utility sectors.

Conversion to backup fuels and their timely procurement are provided for in the gas supply contracts made with all industrial consumers.