Alexey Miller's column

Esteemed colleagues! Dear friends!

Alexey Miller

Alexey Miller

On behalf of the Gazprom Management Committee and on my personal behalf I would like to congratulate you on these wonderful holidays – New Year and Christmas!

As the year 2010 winds down to a close, Gazprom feels proud of the work done. The Company continues the projects for establishing new gas production centers in Yamal and Eastern Russia, developing the gas transmission system, constructing new trans-European gas trunklines and gasifying Russian regions.

The outgoing year 2010 will be remembered for Russia’s first coalbed methane production facility commissioning, the startup of gas deliveries to Petropavlovsk-Kamchatsky and the offshore Nord Stream gas pipeline construction. These events evidence Gazprom’s rapid progress as a leader of the global energy industry.

Esteemed colleagues! I sincerely thank you all for a substantial contribution to the Company’s development. May the upcoming year be happy, fruitful and all of your plans come true. I wish robust health, happiness and well-being to you and your beloved ones!

In 2011 we are going to face the following major challenges: Yamal development, Eastern Gas Program execution, South Stream and Nord Stream projects implementation, Russian regions gasification, Unified Gas Supply System reliability enhancement. I am sure we’ll have a success as our team is highly professional and we clearly see our mission which is to make Gazprom a leader of the global energy market, one of the largest global energy companies worldwide.

Alexey Miller

Alexey Miller

Our colleagues in Kaliningrad are online now. We have an important event today – bringing the second 450 MW power generating unit of Kaliningrad CHPP-2 onstream.

Valery Golubev (during video conference with Kaliningrad CHPP-2)

Valery Golubev (during video conference with Kaliningrad CHPP-2)

“Gazprom expands eastwards. The gas industry saw nearly no development here until recently and the infrastructure is to be created almost from the ground up. The scale of the forthcoming construction activity is tremendous. Therefore, the focus of our investment activity is moving to eastern regions of the country. To this regard, prime cost optimization – for pipes and logistics – is of crucial importance to us.”

“Gazprom's operations geography expands eastwards. The demand for energy carriers in Eastern Russia and Asia-Pacific markets is rapidly growing with almost no infrastructure in this region. The focus of Gazprom's investment activity is moving here with Yakutia being among the key regions of our endeavors. There is no doubt that we will timely meet the tasks on the Chayanda field development and the Yakutia – Khabarovsk –  Vladivostok gas trunkline construction.”

Yegor Borisov and Alexey Miller signing Partnership Agreement between Gazprom and Republic of Sakha (Yakutia)

Yegor Borisov and Alexey Miller signing Partnership Agreement between Gazprom and Republic of Sakha (Yakutia)

“Consolidation of efforts underlies the initiatives aimed at integrating the two companies. The JV will make it possible to apply Gazprom’s cutting-edge coalbed gas production technologies in Ukraine as well, and open new horizons for our cooperation – in developing unconventional energy sources this time. I mean not only producing extra gas in Ukraine, which was previously inaccessible, but a somewhat more important thing – enhancing the safety of coal mining through CBM extraction.”

Yuriy Boyko, Minister of Energy and Coal Industry of Ukraine; Alexey Miller and Evgeny Bakulin

Yuriy Boyko, Minister of Energy and Coal Industry of Ukraine; Alexey Miller and Evgeny Bakulin

“It is a pleasure to give presents on New Year's Eve, especially so large and significant presents. Gazprom is a socially responsible company that cares about the younger generation to grow up strong, healthy and comprehensively developed. This is the idea behind the Gazprom to Children social program. Over the recent years Gazprom has built more than 600 sports facilities throughout the country within the program.

Alexey Miller speaking at opening ceremony for Siberia’s largest track and field facility in Tomsk

Alexey Miller speaking at opening ceremony for Siberia’s largest track and field facility in Tomsk

At that, the track and field facility in Tomsk is the largest and most versatile of them. Wonderful conditions are created here for sports activities. It is a good opportunity for many Tomsk children to receive a start in professional sports, breakthrough sports. I would like to wish them to glorify our country, their region, their town.

Gazprom will expand its presence in the Siberian Federal Okrug. We've got new projects and extensive plans. To the citizens of the regional towns and settlements this means other sports facilities to emerge in the Okrug within the Gazprom to Children program.”

“The feasibility of the Altai project was first announced by Russian President in March 2006. The Russian leader emphasized that this particular route of gas deliveries from Russia to China was a paramount one. The Altai project is backed by Western Siberia's ample proven gas reserves that will enable to secure full loading of the gas pipeline in the amount of at least 30 billion cubic meters a year over the project lifecycle while gas supplies to Russia and Europe will remain intact.

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

Moreover, the area, where the Altai project will be implemented, accommodates active facilities of the Unified Gas Supply System and well-established gas production and transmission companies, we know this region well. All these preconditions along with a great track record in such projects give confidence that the state task on the Altai project execution may be fulfilled within a short timeframe.

The Investment Rationale for the project has been prepared by now with engineering works in progress including the pipeline route survey, and some project solutions have been updated.

The pipeline construction will be launched only after all commercial issues have been settled with the Chinese side and the gas purchase and sale contract have been signed. If all the agreements are reached in mid-2011, natural gas supplies may start as early as in late 2015.

This will call for advanced technical and engineering solutions, efficient management techniques, optimal logistic operations, wide application of competitive ordering packages, production and installation of pipes and equipment. Strict control will be maintained at all stages of pre-construction activities.

In Altai Gazprom will once again demonstrate high environmental safety standards.

We would like to count on the SFO regional and municipal authorities' support when solving issues that fall under their competence. It primarily relates to prompt permitting.

Summarizing the meeting results I can say that we have checked the readiness to initiate the Altai project and find ourselves at the final stage of the preparatory operations. Synchronized schedules of design and exploration work, procurement, construction and commissioning for the Altai gas trunkline as well as reconstruction and overhaul schedules for existing gas transmission facilities will be prepared by the end of the first quarter. From then on we will be fully ready to launch the construction. The “Start” signal will be the signing of commercial gas supply contracts with our Chinese partners.”

"Gazprom is becoming ever more valuable, which is clearly evidenced by the fact that the Company’s share value steadily goes up. The Company’s capitalization has increased by nearly 35 per cent since the most recent Gazprom Shareholders Meeting.

The global economy is reviving, investors’ confidence is growing. By purchasing Gazprom shares, the investors once again cast their vote for the course we have shaped for the Company’s comprehensive development on a global scale, they invest funds in the most promising securities putting their trust in the future.

I have no doubt that Gazprom’s capitalization will not only reach the pre-crisis level, but go up to its fair value. I give a buy recommendation!"

“We positively evaluate changes in the Russian-Polish relations in the gas industry. We have recently agreed on increasing natural gas supplies to Poland under the existing contract as well as come to mutual understanding of many aspects of bilateral partnership between Gazprom and PGNiG. Today our cooperation is based on the parity of interests. It’s clear for us that we are capable of developing cooperation in an efficient way irrespective of whatever the circumstances may be.”

“Gazprom and Gasunie have for a long time been involved in a constructive dialogue along many vectors of bilateral cooperation and are ready to use their mutually gained potential in order to successfully develop it in the future.”

“The accords reached constitute an outstanding example of developing a mutually beneficial strategic partnership between the largest global energy companies. Looking ahead, we expect new large-scale contracts and growing joint presence in new markets.”

Peter Voser and Alexey Miller

Peter Voser and Alexey Miller

“The long-lasting history of Gazprom shows that the strategy pursued by the Company is in line with the sustainable development model which has recently gained wide public recognition. We believe that the primary challenge in achieving sustainability is balanced and efficient use of production resources to the benefit of the present and future generations. The sustainable development benchmarks help us build the Company’s business in the context of the global efforts aimed at addressing such critical international problems as energy efficiency, emissions reduction and social progress acceleration.

Having operations in over 80 constituents of the Russian Federation, we endeavor to ensure that the sustainable development of our business contributes to socioeconomic progress, a better environmental situation and greater prosperity of people in Russia’s regions. The large-scale social programs implemented by the Company are not an abstract ‘social burden’ but indispensable investments in social stability which is a prerequisite for long-term business development.”

“Successful delivery of new infrastructure projects such as Nord Stream and South Stream reflects the mutual interests of Russia and the European Union in the energy sector. It is evident to European partners that the existing infrastructure capacities are not enough to meet the long-term gas demand. I am confident that our cooperation with French companies is a key factor in meeting Europe’s growing need for natural gas.”

At working meeting between Alexey Miller and Jean-Francois Cirelli

At working meeting between Alexey Miller and Jean-Francois Cirelli

"Today’s signing of the documents with our Bulgarian partners confirms the mutual interest of the parties in meeting the growing needs of continental Europe for natural gas. Participation of Bulgaria in the South Stream project proves it is timely and necessary to create additional infrastructure of a trans-European scale."

Alexey Miller and Maya Hristova sign Shareholders’ Agreement for joint project company South Stream Bulgaria AD in presence of Vladimir Putin and Boyko Borisov. Photo by RIA Novosti

Alexey Miller and Maya Hristova sign Shareholders’ Agreement for joint project company South Stream Bulgaria AD in presence of Vladimir Putin and Boyko Borisov. Photo by RIA Novosti

“Execution of the Eastern Gas Program encompassing construction of the Sakhalin – Khabarovsk – Vladivostok gas pipeline and the projected placement of the Yakutia – Khabarovsk – Vladivostok gas pipeline will not only meet the Russian consumer demand in the Far East, but also create the necessary prerequisites for extra gas supplies from Russia to Asia-Pacific including the Republic of  Korea.”


"South Stream is a project of Europe-wide significance and scale. New energy companies and even new states express interest in joining the project. On our part, we are open for such cooperation. It is due to our joint efforts that South Stream will soon turn into a state-of-the-art, reliable and hi-tech gas transmission system."

"South Stream is implemented on schedule. Under the last week arrangements an agreement was signed today that will give a fresh impetus to the Bulgarian project. There are no contradictions left anymore between Gazprom and Bulgarian Energy Holding. Much as there are no more barriers for us to set up a joint venture that will assume responsibility for designing, constructing and operating the Bulgarian section of the gas pipeline.

South Stream is definitely a success. We are confident that national feasibility studies for the project will be carried out on the best effort basis and as late as in the first half of 2011 we will be able to take decision on the European route optimization with due consideration for all the existing possibilities."

“Construction of a modern water sports center will be a wonderful anniversary gift for the city. The new center will not only enable swimming lessons, but water sports competitions including those at the international level as well.

I am convinced that the water sports center will help reinforce the traditions of a healthy lifestyle and is most likely to become a training ground for nurturing new Olympic champions who will bring glory to Irkutsk and entire Russia.”

Alexey Miller and Dmitry Mezentsev during foundation stone laying ceremony for water sports center construction in Irkutsk

Alexey Miller and Dmitry Mezentsev during foundation stone laying ceremony for water sports center construction in Irkutsk

“The major objective of the Program [Eastern Gas Program] is gasification of Eastern Siberia and the Far East. Due to the vast area and the scarce population, the Company will apply various approaches such as autonomous gasification using energy alternatives such as liquefied and compressed natural gases, or liquefied petroleum gas.

Gazprom has already selected some top-priority facilities in Buryatia for gasification with liquefied petroleum gas. These are an 8,000-ton filling station planned for construction in Ulan-Ude and nine boiler houses in the settlements of Ivolginsk, Sotnikovo, Tarbagatai, Sharaldai, Mukhorshibir and Dolga.”

Alexey Miller and Vyacheslav Nagovitsyn

Alexey Miller and Vyacheslav Nagovitsyn

“Today we have achieved significant progress in discussing all the South Stream-related issues. The agreements have been reached on stepping up the activities, elaborating the FS for the Bulgarian section of the gas pipeline and setting up a joint venture. We are going to establish the JV in November 2010, much earlier than it was planned.”

“The shareholder interests underlie all the decisions taken in Gazprom. The amended dividend policy will make the divided calculation principles more comprehensible. An increase in the maximum possible level of dividend payments from 30 to 35 per cent will allow a shareholder to enhance its participation in Gazprom’s profits.

The revised draft version of the Dividend Policy will improve the ratio between the Company’s investments and the shareholders’ profit. This will instill confidence in the shareholders that may count on a pretty good profit in the future.”

I think that one of the main conclusions resulting from the review of the General Scheme for the Russian gas industry development is that the domestic market is becoming a priority for us in the gas industry. Thus, the main emerging competitor for our export markets is represented not by other export markets, but by the domestic market of Russia. In this respect, I would like to dwell on the features of the existing gas market, on the gas prices and the prospects we are expecting and forecasting in the nearest future.

“At today’s meeting with our Azerbaijani counterparts and Rovnag Abdullayev, President of SOCAR we analyzed the implementation of the contract for gas supply from Azerbaijan to Russia over the period from January to August 2010, looked at the ways of the cooperation deepening between our companies and resolved to further increase the gas purchase amount. This is fully in line with our basic contract, which doesn’t limit the maximum volume of gas supply from Azerbaijan. Owing to territorial proximity, transit zones absence and existing gas transmission infrastructure availability, the cooperation deepening in the gas sector between Azerbaijan and Russia is considered the most economically beneficial option for both partners. It is absolutely clear therefore, that Azerbaijan gives priority to increasing its export volumes particularly for Russia. It is widely known that the Russian direction is the most reliable and secure transmission corridor for Azerbaijani gas.”

Alexey Miller

Alexey Miller

"On behalf of Gazprom's Management Committee and my personal behalf I congratulate you on Oil and Gas Industry Workers Day!

It is a pleasure to celebrate our professional holiday with good news and results. Today I would like to speak about our work this year.

Export supplies are gradually reaching the pre-crisis level which is very important for us. Even with account for the second wave of the crisis in some European countries, we expect gas exports to reach 140–145 billion cubic meters in 2010. Given that the average gas price in the European market is growing, we expect our export revenues to reach USD 45 billion this year versus USD 42.5 billion in 2009. In other words, our financial performance is expected to be better than last year."

 

 

"Last year set before us the tasks of finding immediate responses to a whole range of challenges. Gazprom had to act taking into account the rapidly changing situation amid the global financial and economic crisis that peaked in the first half of last year. For Gazprom, the major external factor was a decline in our consumers’ demand and hence – a substantial reduction of the cash flow. Moreover, the global financial markets were actually closed in the first half of 2009.

Gazprom had to take drastic measures to maintain the stability of its activities and the ability to implement strategic projects.

Making every single challenge of the time an opportunity to develop the Company – that is how Gazprom’s task for last year may be formulated".

Alexey Miller

Alexey Miller

"You know, at the recent Saint Petersburg Economic Forum the priority was given to large-scale energy projects, primarily, Nord Stream and South Stream. We have signed the documents on the Gaz de France Suez joining the Nord Stream project as a new shareholder. The list of the project participants has finally been defined. We are pleased to mention that French business has been taking a proactive role in the implementation of major transmission projects. Following the crucial accords that were reached during the Saint Petersburg Economic Forum in relation to the South Stream project, another French company, Électricité de France, signed the trilateral documents with Gazprom and Italian Eni to enter the South Stream project."

From one side – South Stream is the result of cooperation between Russia and Europe in the recent decades, from the other – this is a new level of cooperation. The project implementation is an ambitious goal for both strategic partners.

From left to right: Alexey Miller, Marcel Kramer and Alexander Medvedev.

Recently, there were many myths and theories about the gas market, which, as in the TV program "MythBusters", we do need to examine.

Perhaps the most discussed topic both among the professionals and in the business-focused media has become the phenomenon of shale gas. Is it possible to talk about "shale revolution", which will shake the foundations of the gas industry? Or is it a fashion trend, sort f a "shale fever" that one has to pull through?

"At the first stage a joint venture may be set up on a parity basis between the companies – 50 by 50 per cent. At the moment, it is necessary to outline the list of assets that can be contributed to the JV by each party."

"Verbundnetz Gas attained considerable success under your chairmanship, reinforced its position in Germany and entered new untapped markets. At the same time, the business partnership and friendship ties grew stronger between our companies. Thank you for the years of fruitful cooperation, during which we achieved much and laid a cornerstone for the future joint victories."

"On April 30 Vladimir Putin, Prime Minister of the Russian Federation made a proposal to the Ukrainian party in Sochi that Gazprom and NAK Naftogaz Ukrainy should merge. Today this proposal has been discussed in detail.

The idea of merging Gazprom and Naftogaz Ukrainy is absolutely pragmatic. It is stipulated by the common development history of the gas industry in our countries, in particular – a single gas transmission complex dating back to the USSR. Therefore, it is natural that the Ukrainian gas transmission system (GTS) upgrade should be closely linked to Russia’s Unified Gas Supply System development.

The GTS was initially set up for the purpose of Russian gas transmission to Europe. As you know, the pipe is a valuable asset in case it is filled with gas.

However, the merger proposal is not related to the idea of creating a trilateral gas transmission consortium embracing Russia, Ukraine and European companies. This proposal is different and more global, it is of a larger scale.

I am sure that the merger of the two companies will become an important step towards the European energy security enhancement and diversification of the routes for Russian gas supply to Europe. Therefore, our plans to construct the South Stream are intact. It is planned that until December 31, 2015 considerable gas transmission capacities will be created for Russian gas delivery via a new export corridor."

"Today is an important day in the South Stream history. By acknowledging on the inter-governmental level its commitment to take part in the development of an additional route of transportation of Russian gas to Europe, Austria became the seventh country participating in the onshore part of the project. Gazprom and its partner entered into a framework agreement on the implementation of South Stream in Austria.

According to currently achieved arrangements the basic gas pipeline will be laid via at least seven European countries and stretch for thousands of kilometers. Once the gas pipeline is constructed South and Central Europe will be forever safe from and secured against transit crises and cold winters."

From left to right: Alexey Miller, Vladimir Putin, Wolfgang Ruttenstorfer. Photo by RIA Novosti

From left to right: Alexey Miller, Vladimir Putin, Wolfgang Ruttenstorfer. Photo by RIA Novosti

"Gazprom has not only ensured reliable and uninterrupted gas supplies to Russian and foreign consumers, but also considerably increased the supply amount. Over the last autumn–winter period our Company provided the domestic and the foreign markets with additional 15.8 and 20.9 billion cubic meters of gas, respectively, as compared to the identical period of 2008–2009. This is another vivid demonstration of the gas market improvement."

"The changes have been introduced in the contract in pursuance of the intergovernmental agreements and don’t have a negative effect on Gazprom’s economics."

Russian and Ukrainian Presidents Dmitry Medvedev and Viktor Yanukovich during the signing of contract addenda by Gazprom and Naftogaz Ukrainy CEOs Alexey Miller and Evgeny Bakulin. Photo by RIA Novosti

Russian and Ukrainian Presidents Dmitry Medvedev and Viktor Yanukovich during the signing of contract addenda by Gazprom and Naftogaz Ukrainy CEOs Alexey Miller and Evgeny Bakulin. Photo by RIA Novosti

"The Company is traditionally active in arranging amateur and professional competitions in Russia. They considerably promote sports activities and a healthy lifestyle. It should be noted that the Vitaly Fatyanov Competition is a crucial stage in the struggle for the right to host the 2016 World Biathlon Championship. I am sure that, if decently arranged and successfully held, the Competition will get us closer to this cherished goal."

Victorious finish by Ivan Cherezov

Victorious finish by Ivan Cherezov

"I am sure that connecting the gas pipeline systems of Russia and Europe is a fundamentally new approach to ensuring the continent's energy security. The Nord Stream pipeline will not only ensure the highest reliability of supply, but will also make it possible to continue to meet Europe's growing demand for natural gas. Our collaboration with major European energy companies on the Nord Stream project will no doubt become a model of international cooperation for other large-scale gas transmission projects."

Alexey Miller

Alexey Miller

"We should proceed from the fact that NAK Naftogaz Ukrainy has to replenish its UGS facilities with the required gas volumes by the beginning of the 2010–2011 autumn/wither period in order to smoothly overcome this peak load period, said Alexey Miller. He emphasized that this challenge had to be met both for securing gas supplies to Ukraine's consumers and for performing reliable Russian gas transit to Europe."

"The completion of Phase I financing is a landmark event in the development of Nord Stream and helps take the project from concept to reality. Nord Stream solidifies the long-standing energy relationship between Russia and Europe, a relationship that has lasted nearly forty years. Gazprom is delighted to be part of a venture that will provide reliable supplies of Russian energy to Europe for many decades to come."

"Addressing the meeting, Alexey Miller underlined that the Eastern Gas Program implementation was among Gazprom’s strategic priorities at the moment. He particularly mentioned the tough deadline set by the Government for bringing onstream the prioritized facilities in Yakutia: launching the Yakutia – Khabarovsk – Vladivostok gas transportation system (GTS) construction in 2012, starting oil and gas production from the Chayanda field – 2014 and 2016, accordingly. In parallel, the top-priority gas processing and gas chemical facilities are to be put onstream in 2016. When completed, these facilities will make a great contribution to the efficient development of the Chayanda field with its multi-component gas containing helium.

Alexey Miller and Vyacheslav Shtyrov (center)

Alexey Miller and Vyacheslav Shtyrov (center)

Creation of the Yakutia gas production center within the state-run Eastern Gas Program will demand coordinated efforts of Gazprom, federal and regional authorities. When creating the Yakutia gas production center, Gazprom focuses on the comprehensive approach involving the synchronized commissioning of facilities. To achieve this goal, a particular detailed plan of cooperation between Gazprom and Yakutia’s Government is to be worked out.

Alexey Miller stated that Gazprom was intensively exploring the Chayanda field and had already completed a great scope of seismic survey and drilled initial wells. The schedule of activities on the Chayanda field development was adopted.

The Gazprom Management Committee Chairman highlighted that engineering of hydrocarbons production, transportation and processing facilities had to be stepped up. That is also required to ensure synchronization with a series of Yakutian infrastructure projects partially funded from the federal budget. At the moment, a new energy supply, network and transportation infrastructure is being intensively shaped in the Republic and the project decisions being adopted should be optimal and meet the needs of gas workers, inter alia.

"Federal support could contribute significantly to the progressive development of the gas industry in Eastern Russia. This is especially important during the payback period," said Alexey Miller.

Optimal loading of the Yakutia – Khabarovsk – Vladivostok GTS with at least 30 billion cubic meters of gas per annum will be very important for efficient development of the Yakutia Center through involvement of all regional gas resources. In this regard, Gazprom submitted requests to the Federal Subsoil Resources Management Agency for obtaining the right to use the subsoil resources of the Srednetyungskoye, Tas-Yuryakhskoye, Sobolokh-Nedzhelinskoye and Verkhnevilyuchanskoye fields listed as the fields of federal significance.

"Developing gas supply to and gasification of Yakutia is a crucial issue of the cooperation between Gazprom and the Republic. At the same time, the Company is ready not only to start the gasification of Yakutia’s southern regions from 2016, when the first indigenous gas extraction in the Chayanda field is to be commenced, but to take part in earlier local gasification projects as well," stressed Alexey Miller.

He also paid attention to the fact that the Yakutia gas production center creation and development envisaged engagement of highly qualified personnel, who might take pre-training courses in the Republic. In this context, Gazprom supports the decision by Yakutia’s Government to set up in Yakutsk a specialized department in the Northeastern Federal University."

"35 years ago the first contracts to supply Russia's natural gas to Gaz de France were signed. Since that time, Russian-French cooperation in the energy sector has rested on a firm will of the parties to build strong, long-term relationship and to develop a partnership based on respect for the balance of interests of suppliers and consumers. As a result, France has been among the five largest buyers of Russian gas for a number of years now and our interaction is not limited to gas supplies any more – it also includes such areas as energy saving, construction and operation of underground gas storage facilities, LNG sales, scientific and technical cooperation, advanced training of specialists. The illustrious cultural and sports projects implemented by Gazprom and GDF SUEZ deserve special attention.

We are confident that the development of our partnership will not slow down – this has been proven by the signing of the Memorandum on additional supplies of Russian natural gas and on the Nord Stream project. Participation of GDF SUEZ in the construction of this gas pipeline confirms its importance for ensuring sustainable energy supply to Europe. Vast experience in joint implementation of energy projects and a creative approach to new challenges give Gazprom and GDF SUEZ every right to call our collaboration the benchmark for energy partnerships."

"The Nord Stream is a strategically important pipeline for Europe. The value of the project is difficult to overestimate, as it will be an additional guarantor of energy security for millions of consumers and give them confidence in the future. The Nord Stream is a good example of an offshore gas pipeline complying with stringent international environmental requirements. It has recently received the last approval needed to begin construction this April. Together with our counterparts from GDF SUEZ, we believe that the Nord Stream will not merely strengthen cooperation between our companies, but will also help develop the energy sector of the entire continent and be another factor in the success of the long-term Russian-French partnership in the gas industry."

Signing Memorandum with regard to additional gas supplies to GDF SUEZ and Nord Stream project

Signing Memorandum with regard to additional gas supplies to GDF SUEZ and Nord Stream project

"Mr. Podyuk is a real gas worker, people like him are pride and glory of the world’s gas industry. He took part in developing the Vuktylskoye field in the Republic of Komi and was among the pioneers who entered the Yamal Peninsula in the mid-1970s. He supervised pre-development and bringing of the giant Zapolyarnoye field to the projected capacity and the launch of the Achimov deposits and coalbed methane development in Russia. Mr. Podyuk is characterized by broad thinking, rich experience, an intelligent and systematic approach to any complex assignment. There is no doubt his track record, both personal and professional, will serve as an example for many generations of gas workers to come."

"Gazprom’s abundant resource base in Western Siberia, to be subsequently accompanied by the new gas production center being formed in the Republic of Sakha (Yakutia), enables to meet the long-term demand for Russian natural gas in Asia-Pacific countries. There is no need to engage additional gas resources for this purpose from other eastern regions of Russia, namely, from the Kovykta gas and condensate field in the Irkutsk Oblast.

Gazprom is consecutively developing in Russia’s Far East the gas production infrastructure that will create a favorable environment for natural gas supplies in the strategic eastern direction. Upon completion of the Sakhalin – Khabarovsk – Vladivostok gas transmission system (GTS) we are going to set to the Yakutia – Khabarovsk – Vladivostok GTS construction in 2012. This will ensure successful gas supply to southern regions of the Far East and will help develop natural gas exports (both by pipeline and by sea) to Asia-Pacific countries, inter alia, through establishing gas liquefaction and compression capacities in the Primorsky Krai."

"Application of high technologies is a significant competitive advantage and an essential part of efficient company development on the global energy market. This is absolutely the case with Gazprom. We deliver unique and sophisticated energy projects utilizing innovative approaches and unparalleled equipment produced domestically and abroad.

Today’s Agreement is a crucial step aimed at considerably increasing the innovative potential of both our Company and Russia. I am convinced that the mutually-beneficial cooperation between Gazprom and Russian Technologies will strongly bolster the domestic science, industry and energy sectors."

Sergey Chemezov and Alexey Miller

Sergey Chemezov and Alexey Miller

"We have started building the last facility of the onshore section of the Nord Stream gas pipeline. We will launch construction of the offshore section this spring.

The Portovaya CS will be a unique gas transmission facility in terms of aggregate capacity, working pressure (220 Ata), gas transmission distance and daily gas dehydration volume. The station is unparalleled in the world. This facility is at the forefront of the sci-tech progress in the gas industry. When implementing this project Gazprom will utilize novel equipment and cutting-edge technologies. The station will secure gas transmission over the distance of 1,200 kilometers via the Nord Stream and no extra compressor stations will be built on the German coast.

The CS construction is a crucial stage in Gazprom’s activities aimed at diversifying the Russian gas supply routes and enhancing the European energy security."

Left – Alexey Miller

Left – Alexey Miller

"The large-scale South Stream project, being of special importance for increasing the reliability of gas supply to Europe and engaging a big number of foreign partners, requires consolidation of Gazprom’s efforts for prompt execution of the most prioritized project of the Company. I am sure the immense experience and credibility of Leonid Chugunov will help build an optimal and efficient structure of the project management."

"The beginning of 2010 was marked with a very important event – Gazprom has started up natural gas procurement from Azerbaijan for the first time ever. During the last year we held very constructive negotiations with our Azerbaijani counterparts and as soon as in a few months after the contract signing, natural gas was supplied to our system.

It should be noted that we had no doubt these arrangements were achievable. Objectively, Gazprom offered the most competitive conditions of gas purchase from Azerbaijan since we had everything needed for that purpose: the common borders and the gas transmission infrastructure under operation.

A specific feature of the contract signed is that it does not limit the maximum amount of gas purchase. We’ll buy as much gas as the Azerbaijani party will be able to supply. This is unparalleled in any other contract of Gazprom, which additionally proves a high level of our partnership relations.

I believe we have laid the first cornerstone of successful and mutually beneficial cooperation in the gas industry between Russia and Azerbaijan for many years to come."