Alexey Miller's column

New Year and Christmas greetings!

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!

Speech by Alexey Miller at pre-New Year telephone conference

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

 

The Gazprom headquarters – Kaliningrad CHPP-2 video conference

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)

On importance of pipe products cost optimization for eastern regions

“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.”

On Gazprom’s investment activity in Yakutia

“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)

On setting up JV for coalbed gas production in Ukraine

“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

On Siberia’s largest track and field facility opened in Tomsk

“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.”

On strategic importance of the Altai project

“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.”

On steady growth of the Company’s share value

“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!"

On Russian-Polish relations in the gas industry

“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.”

On cooperation with Gasunie

“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.”