Address to Shareholders

Chairman of the Gazprom Board of Directors Viktor Zubkov


Chairman of Gazprom's Management Committee Alexey Miller

Dear Shareholders!

Gazprom has a leadership position in the global energy industry. The Company operates in the gas, oil, and power generation sectors in the Russian and international markets. Gazprom's vast resource base, well-diversified product range, and extensive sales geography enable sustainable simultaneous growth across a number of areas.

This is clearly demonstrated by the Company's overall performance in 2015.

Today, Gazprom is strategically focused on the Asia-Pacific market, where a significant potential for growth in energy demand is concentrated. During 2015, efforts to build an infrastructure supporting Russian gas supplies to China via the eastern route gained strong momentum. Construction started at the Chayandinskoye field, one of the largest gas fields in the East of Russia. Progress has been made on the Power of Siberia pipeline project, an energy bridge supporting long-term cooperation between Russia and China. All priority facilities required to start supplies will be completed strictly on time.

Chinese partners have shown a growing interest in Russian gas. In 2015, the Company signed the Heads of Agreement providing for the supply of gas from Western Siberian fields to China via the western route, the Power of Siberia 2 gas pipeline. A memorandum was also signed on another route, to supply gas from the Russian Far East.

The development of gas resources of Eastern Siberia and the construction of the Power of Siberia pipeline have enabled the implementation of Russia's largest gas processing project. Gazprom has launched the construction of the Amur GPP, which will process 42 bcm of natural gas per year. This facility will be one of the most modern and advanced gas processing plants globally. The plant's marketable products will include components used in gas chemical production and other industries, among them ethane and helium.

2015 was a successful year for the Company in its traditional, European market as well. Demand for Russian gas in the European countries has shown strong growth, with the share of the Company's supplies in total gas consumption in Europe rising to a historical high of 31%. In response to evolving market needs, Gazprom, BASF, Uniper, ENGIE, OMV and Shell took a decision to construct the Nord Stream 2 gas pipeline. The new route will run from Russia to Germany, through the Baltic Sea, and have a capacity of 55 bcm of natural gas per annum. It will eliminate transit risks and significantly improve the reliability of gas supplies to European consumers for decades to come.

Gazprom has already started implementing projects to build the required supporting infrastructure in Russia. The first joint was officially welded on the Ukhta – Torzhok 2 gas pipeline, a key project for the expansion of Russia's national Unified Gas Supply System in the corridor linking the Yamal Peninsula and the Gulf of Finland. The pipeline will enable additional supplies of natural gas to Russia's North-West to support both gas exports via Nord Stream 2 and gas supplies to domestic consumers.

Liquefi ed natural gas trade is an effective tool of Gazprom's global expansion strategy. The Company will consistently expand its LNG production capacity. In 2015, Gazprom and Shell signed a memorandum on the construction of the third process train at Russia's only LNG plant on Sakhalin. This will boost the plant's design capacity by 50%.

In 2015, Gazprom achieved an important milestone in its power generation business. Two modern combined cycle gas turbine units, with an aggregate capacity of 640 MW, were commissioned in the Moscow Region. This marked the successful completion of Gazprom's major programme to add 2,9 GW of new capacity to supply the Russian capital's energy needs.

Gazprom's activities make a positive contribution to the social and economic development of Russian regions. 2015 marked exactly ten years since Gazprom launched a major programme for expansion of gas infrastructure in Russian regions. Over that period, 27.8 thousand km of gas pipelines have been constructed, bringing natural gas to over 3,700 locations. The gas infrastructure coverage in Russia was increased by 13% to 66.2%. This means improved living standards for millions of people and a significant expansion of Gazprom's sales market.

Dear Shareholders, Gazprom's business strategy helps the Company maintain strong positions in all of its key business segments and sufficient resilience, ensuring that its shareholders can look to the future with confidence.