Strengthening Gazprom’s positions in international NGV markets boosts economic efficiency of Russian gas sales

RELEASE

The Gazprom Management Committee took notice of the information about the Company's efforts aimed at expanding natural gas use as a vehicle fuel abroad.

The meeting noted that the main advantages of natural gas as a fuel were its environmental friendliness, economic efficiency, reliability and producibility.

So, as of today, natural gas is the most environmentally friendly among all widely used vehicle fuels. Car conversions from petrol to gas make it possible to reduce air emissions approximately five times. Therefore, the use of natural gas in vehicles fully meets the aspirations of many countries worldwide, and especially in the European Union, to mitigate adverse environmental impacts.

Natural gas is an economically attractive alternative to conventional petroleum fuels. In the target markets the existing compressed natural gas (CNG) price is approximately 40 per cent lower than the price of petrol and diesel (per unit of energy equivalent). Several European countries have legally approved a complex of financial and tax measures in relation to the natural gas vehicles (NGV) fuel, favoring the development of this segment.

Gas-powered vehicles and vessels are no less safe and in some cases are even safer than vehicles running on conventional petroleum fuels. In addition, gas-powered engines have a much lower noise level.

Gazprom considers the NGV market as a promising area of the Company's activities targeted at increasing the economic efficiency of Russian gas sales abroad.

At present, Gazprom Group is represented in the European NGV market by Gazprom Germania and Vemex.

Gazprom Germania owns 21 CNG filling stations that fuel motor vehicles with compressed natural gas (CNG) in Germany. In the near future Gazprom Germania is planning to increase the number of its filling stations to 23.

In April 2013 Gazprom Germania and Volkswagen signed the Agreement on exclusive supplies of Russian NGV fuel for the Volkswagen Motorsport team engaged in a racing series involving the same models of gas-powered cars.

Since October 2013 Gazprom Germania has been implementing the project aimed at converting the urban bus fleet to LNG in Olsztyn (Poland). The company won the tender procedure for implementing the same project in Warsaw. It is also planned to implement similar projects in other Polish cities.

Vemex owns 7 CNG filling stations in the Czech Republic. Before the end of 2014 the company expects to bring the number of its filling stations to 14.

Gazprom implements the action plan aimed at wider use of the NGV fuel as a bunker fuel in the Baltic and the North Seas.

Besides, Gazprom's NGV fuel enters the Asia-Pacific market. In November 2013 Gazprom and PetroVietnam signed the Agreement on setting up the PVGAZPROM Natural Gas for Vehicles joint venture responsible for implementing a project on natural gas use as a vehicle fuel in the Republic of Vietnam.

The Management Committee approved the 2014–2015 Action Plan for strengthening the Company's positions in the NGV sector of international markets. In accordance with the plan, priority international markets will be determined for developing Gazprom's own activities in the NGV sector as well as target parameters for 2014–2015 (and until 2030). Special attention will be paid to the development of NGV markets in the South Stream project member countries.

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