Gas Resources

Reserves

Gazprom Group is the world’s larges company in terms of natural gas reserves. Due to an increase in the volume of geologic exploration and the receipt of licenses for the subsoil use, the Group’s natural gas reserves (categories A+B+C1) increased by 11.2% and were estimated at 33.1 tcm as of December 31, 2008.

Also, the hydrocarbon reserves (categories A+B+C1) of associated companies equal to the share owned by Gazprom Group amounted to 555.4 bcm of gas, 617.2 million tons of oil and 45.9 million tons of gas condensate.

An audit of Gazprom Group’s hydrocarbon reserves carried out by DeGolyer and MacNaughton in accordance with the international PRMS standards estimated the Group’s proved and probable hydrocarbon reserves at 27,336.2 million tce amounting to US $230.1 billion (including Gazprom Neft’s reserves, amounting to US $23.7 billion). Share of reserves (categories A+B+C1) included in audit amounted to 88% of gas, 85% of gas condensate and 92% of oil.

Geological exploration work

Geological exploration work carried out by Gazprom is primarily aimed at increasing its resource base potentialin order to provide for sustainable growth in production volumes in the medium and long term.

In 2008 the total amount of funds allocated for geological exploration of hydrocarbons in Russia was RR 46.9 billion, including the expenses of RR 28.5 billion listed as capital investment.

Three oil fields (the Kamovskoye field in the Krasnoyarskiy Kray, the Zapadno-Rozhdestvenskoye field in the Orenburg region, and the Valyntoyskoye field in Western Siberia) were discovered within areas licensed to Gazprom in the reporting year, along with 22 deposits at previously discovered fields (including 18 deposits discovered by Gazprom Neft). Also OOO TsentrKaspneftegaz (with OAO Gazprom’s shareholding of 50%) discovered a new field – the Tsentralnoye field – on the Caspian Sea shelf with hydrocarbon reserves (categories C1+C2) amounting to 169.1 million tce.

In 2008 the incremental increase in reserves of natural gas due to the geologic exploration work amounted to 583.4 bcm, while the oil and gas condensate reserves reached 61.0 million tons. The major incremental growth in category C1 gas reserves came from the Semakovskoye field on the Tazovskaya Bay shelf (146.4 bcm) and the Yuzhno-Russkoye field in the Yamal-Nenets autonomous region (YNAR) (47.6 bcm), while in oil reserves the growth was driven by the Priobskoye field in the Khanty-Mansiisk autonomous region (14.9 million tons) as well as the Urengoyskoye (8.6 million tons) and Yamburgskoye (7.2 million tons) fields in YNAR. The reserve recovery ratio amounted to 106.0% for natural gas and 152.5% for oil and gas condensate.

Developing Fields on Russia’s Continental Shelf

Gazprom Group holds 15 licenses for the subsoil use on the shelf of Russian seas, including five exploration and production licenses for the areas (fields) of federal importance, which are located partiallyonshore and on the Kara Sea shelf (the Kruzenshternsky and Tasiysky areas on the Yamal Peninsula and the Kara Sea shelf, the Tota-Yakhinsky and Antipayutinsky areas on the Gydan Peninsula and the Kara Sea shelf, and the Semakovsky area on the Tazovsky Peninsula and the Kara Sea shelf).

Geological exploration work was carried out on the shelf of the Kara and Pechora seas in 2008. Three wells were drilled at the Semakovskoye field, totaling 3,052 m. An exploration well was drilled at the Kamennomysskoye-More field, reaching a total of 2,658 m. An exploration well was drilled within the Dolginsky licensed area, equaling 2,800 m. The geological structure of the fields was refined.

Engineering research was performed at sea to install drilling rigs on eight sites there (the Semakovskoye, Dolginskoye, Kamennomysskoye-More and Kirinskoye fields).

There are plans to receive licenses for the promising formations on the Priyamalsky shelf and the unallocated mineral reserve fund on the shelf of the Okhotsk Sea.

Licenses

Gazprom Group’s hydrocarbon reserves in 2008 increased compared to those in 2007 primarily due to the licenses it received for fields of federal importance, based on the decision of the Government of the Russian Federation without any contest held, namely for the Chayandinskoye, Zapadno_Tambeyskoye, Kruzenshternskoye, Malyginskoye, Severo_Tambeyskoye, Tasiyskoye, Antipayutinskoye, Tota_Yakhinskoye, Semakovskoye, and Kirinskoye fields. The reserves (categories A+B+C1) of these fields were estimated at 3,307.9 bcm of natural gas, 76.9 million tons of gas condensate, and 66.4 million tons of oil as of December 31, 2008.

As of December 31, 2008, Gazprom Group held 262 licenses for the subsoil use that imply hydrocarbon exploration, development, and production, including 66 geological exploration, development, and production licenses, 151 development and production licenses, and 45 geological exploration licenses.

Additionally, Gazprom Group’s associated companies possessed 82 licenses, including 79 hydrocarbon production licenses and 3 geological exploration licenses.

The incremental increase in the reserves due to the auctions amounted to 1.5 bcm of natural gas and 1.5 million tons of oil; licenses confirming the discovery of fields were received, which permit 17.2 bcm of natural gas to be developed. The licenses for the development of 0.2 bcm of natural gas and 0.5 million tons of oil ceased to have effect in 2008.

Developing hydrocarbon reserves abroad

Following its contractual obligations, Gazprom continued to implement joint projects abroad that had been started earlier, including projects in Vietnam (geological exploration work on Block № 112), India (geological exploration work on Block № 26 in the northern part of the Bay of Bengal), Venezuela (geological exploration work within the Rafael Urdaneta project), Libya (geological exploration work in licensed areas № 19 and 64), and in Central Asian countries.

As of December 31, 2008, Gazprom Group held 19 licenses for the subsoil use that imply hydrocarbon exploration, development, and production abroad, including five geological exploration, development and production licenses, and 14 geological exploration licenses.

In 2008, licenses were received to carry out geologic exploration work at the Kugartskaya area and Vostochny Maylisu IV in Kyrgyzstan and Sarikamash and Zapadny Shaambary in Tajikistan.

Projects abroad in 2008 accounted for 32.1 thousand m of exploration wells drilled and a total of 6.3 thousand km (2D) and 0.9 thousand sq. km (3D) of seismic surveys at OAO Gazprom’s expense. Major geological exploration work was carried out in the Ustyurt region in Uzbekistan.

Gazprom expands its participation in developing hydrocarbon resources in Vietnam and Venezuela.

In October 2008, OAO Gazprom and Vietnamese oil and gas corporation Petrovietnam signed an oil and gas Contract concerning Blocks № 129, 130, 131, and 132, which are located 100 to 200 km off the South Vietnamese coast in the South China Sea. The blocks have an area of 28.46 thousand sq. km with aggregate potential resources of 700 million tce. The 30-year oil and gas Contract envisages that hydrocarbon exploration, development, production, and sales will be based on production sharing agreement.

As cooperation continued with the Venezuelan company Petroleos de Venezuela, agreements were signed that prescribe Gazprom’s participation in the certification and exploration of reserves on Block Ayacucho-3 in the Orinoco oil belt as well as a Memorandum of Understanding concerning the Blanquilla Este y Tortuga project envisaging natural gas exploration and production on the shelf of Venezuela, its supply to the domestic market, as well as its liquefiction and export.

Issues were considered concerning the Group’s participation in oil and gas projects in Bolivia (Blocks Sunchal, Acero, Ipati, and Aquio), in particular as part of consortiums with the world’s major oil and gas companies.

In December 2008, the Group’s company Gazprom Netherlands B.V. won the tender for hydrocarbon exploration and development in the onshore area El Assel located in Algeria. Extractable oil reserves of the area are estimated at 30 million tons. Gazprom Neft is also considering participation in foreign projects; the most promising of which are in Libya, Syria, Iran, Indonesia, Iraq, Venezuela, and Kazakhstan.