Speech by Alexey Miller at the meeting on the progress in implementing the assignments by Russian President and the Government regarding the Republic of Sakha (Yakutia) socio-economic development

August 21, 2009, Town of Mirny

Gazprom has considerably intensified its activities in eastern Russia. Large-scale projects are being implemented in the gas production, transportation and processing sectors. Special emphasis is placed on Yakutia, a gas-reach province. The prospective and forecasted gas reserves in Yakutia are estimated at 10.4 trillion cubic meters, while the explored reserves exceed 1.3 trillion cubic meters.

According to the state Eastern Gas Program one of gas production centers will be created in eastern Russia (Yakutia). The center will be based on one of Russia’s largest Chayanda oil and gas condensate field with gas reserves at 1.24 trillion cubic meters.

By 2020 gas production in Yakutia may amount to 34.6 billion cubic meters.

The timely granting of the subsurface rights for the Chayanda field (directive of April 16, 2008) by the Russian Federation Government makes it possible for Gazprom to start its development in a prompt manner. According to the Eastern Gas Program the development of the oil rim and gas deposit is to be started in 2014 and 2016 accordingly.

Gazprom has elaborated a plan of actions on the Chayanda field development. Performing all the works in lockstep is the top-priority objective, which will help the Company to meet successfully the assumed obligations.

At present, two exploratory wells are being drilled, 2D and 3D seismic survey, scheduled for the winter of 2009 is at the initial preparatory stage. Engineering-geological studies and geodesic survey have been done.

Gas from the Chayanda field has a complicated composition with a high content of helium – a valuable component for high technologies advancement. In this context, Gazprom is performing a comprehensive study of the opportunities to create gas chemical and gas processing facilities using natural gas from the Chayanda field. The locations of these facilities and underground helium storages are being considered with due regard of the options proposed on the part of the Sakha (Yakutia) Republic.

The Eastern Siberian and the Far Eastern fields, the Chayanda field inclusive, are being developed in a harsh climatic environment with no relevant infrastructure, and this calls for considerable capital costs. Oil companies operating in the region have obtained tax allowances. The identical measures should be taken to ensure efficient gas fields development in eastern Russia. Therefore, it is crucial to define, as early as in 2009, the measures of state support for gas investment projects being executed in Eastern Siberia and the Far East. These may include, inter alia, “tax holidays” over the project's payback period and reduction/abolition of export tariffs on extracted gas.

In 2010 Gazprom will finalize the Investment Concept for gas chemical facilities deployment in Eastern Siberia and the Far East, as well as the Reservoir Management Plan for the Chayanda oil and gas condensate field development.

To ensure the injection of Yakutia’s gas into the gas transportation system by 2016, it is necessary to construct the Yakutia – Khabarovsk – Vladivostok gas trunkline by that period. The gas pipeline will provide the penetration of Yakutia’s gas into the southern regions of the Far Eastern Federal District and into the Pacific coastal areas.

Gazprom will set to constructing the gas pipeline in 2012 upon completion of the Sakhalin – Khabarovsk – Vladivostok gas transmission system.

The gas production forecast has been updated according to the follow-up data obtained during operations at the Chayanda oil and gas condensate field. In this regard, its is necessary to resolve the issue of granting Gazprom in 2009 the subsurface rights for Yakutia’s Srednetyungskoye, Taz-Yuryakhinskoye, Sobolokh-Nedzhelinskoye and Verkhnevilyuchanskoye fields in order to ensure an optimal loading of the Yakutia – Khabarovsk – Vladivostok gas transportation system. This is especially significant as helium is only found in some of the fields and

Yakutia's gas may be delivered to the market simultaneously.

Gazprom and the Republic of Sakha (Yakutia) are strategic partners. We have signed and keep implementing the Agreement of Cooperation and the Accord on Gasification. In June 2009 the Company joined the Investment Agreement to become as a co-investor of the South Yakutia Comprehensive Development project aimed at shaping a new large industrial area in Eastern Russia.

Gazprom is implementing the nation-wide Russian Regions Gasification Program of state significance. In 2008 the Republic of Sakha (Yakutia) was included into the Program.

Gazprom’s proactive efforts aimed at creating the Yakutia Gas Production Center will create conditions for rapid socio-economic development in the region, boost production activities and improve the living standards in Yakutia. New workplaces will be created, the employment rates will increase and social stability will be ensured for a long-term period.