The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company's Management Committee and Paolo Scaroni, Chief Executive Officer of Eni.

The parties discussed the issues of bilateral cooperation in the energy sector within the Strategic Partnership Agreement. The meeting addressed the preparation of a gas purchase contract between Gazprom and SeverEnergia.

The meeting participants noted that due to the ongoing warfare in Libya the Russian company involvement in the Elephant project and the field operations will be kept “on hold” until the situation stabilizes.

In addition, during the meeting Alexey Miller and Paolo Scaroni discussed the progress with the entry of French EDF and German Wintershall in the South Stream AG shareholding structure.

Background

Italy is one of the major importers of Russian gas in Europe. Gazprom and Eni have established a long-standing partnership.

In November 2006 the companies entered into the Strategic Partnership Agreement. Under the Agreement, the existing contracts for Russian gas supplies to Italy were extended until 2035. Moreover, Gazprom began to directly supply the Italian market with Russian gas in the amount of up to 3 billion cubic meters a year in 2007 and was entitled to acquire stakes in Eni's international assets.

On June 23, 2007 Gazprom and Eni signed the Memorandum of Understanding on the South Stream project execution. The Memorandum outlines the areas of cooperation between the companies in designing, financing, constructing and managing South Stream.

On May 15, 2009 Gazprom and Eni inked the second Addendum to the Memorandum of Understanding on the South Stream project execution. The Addendum stipulates an increase in the annual throughput of the gas pipeline offshore section from 31 to 63 billion cubic meters, and regulates the gas marketing issues within the project.

On January 18, 2008 the South Stream AG Special Purpose Entity was registered in Switzerland. The Entity was established by Gazprom and Eni on a parity basis.

On June 19, 2010 Gazprom, Eni and EDF signed the trilateral Memorandum providing for specific steps towards the French company's entry in the shareholding structure of South Stream AG.

On March 21, 2011 Gazprom and Wintershall Holding GmbH inked the Memorandum of Understanding on the South Stream project, providing for participation of the German company in constructing the gas pipeline offshore section.

Yamal razvitiye (owned by Gazprom neft and NOVATEK on a parity basis) holds a 51 per cent stake in SeverEnergia with the remaining 49 per cent owned by Arctic Russia B.V., a joint venture of Italian Eni (60 per cent) and Enel (40 per cent). SeverEnergia fully owns Arcticgaz, Urengoil Inc. and Neftegaztekhnologia. The companies hold subsurface licenses for oil and gas fields in the Yamal-Nenets Autonomous Okrug: the Samburgsky, Yevo-Yakhinsky, Yaro-Yakhinsky and Severo-Chaselsky blocks. Their ABC1 + 50% C2 reserves amount to 919 billion cubic meters of gas, 330 million tons of oil and 109 million tons of condensate.