OREANDA-NEWS. July 21, 2011. The Board of Directors addressed the data on the interim results of the Eastern Gas Program execution by Gazprom pointing out the timely execution of the projects for gas supply to the Kamchatka Krai and the Sakhalin Oblast.

 The Board of Directors tasked the Gazprom Management Committee to continue implementing the following top-priority investment projects and activities as part of the Eastern Gas Program:
—  construction of the Sakhalin – Khabarovsk – Vladivostok gas transmission system (GTS);
—  pre-development of the Kirinskoye field and construction of a gas pipeline to connect the field's onshore processing complex with the Sakhalin main compressor station;
—  conduct of geological exploration at the Kirinsky Block located offshore the Sakhalin Island;
—  pre-development of the Kshukskoye and Nizhne-Kvakchikskoye fields to ensure gas supply to the Kamchatka Oblast;
—  performance of comprehensive geological exploration and pre-development of the Chayandinskoye field to prepare it for pilot operation.

 In addition, the Gazprom Management Committee was tasked to submit for consideration by the Board of Directors in the fourth quarter of 2011 a list of the Company's promising production facilities in Eastern Russia as part of the efforts on updating the Eastern Gas Program.
Background

 The September 2007 Order by the Russian Federation Industry and Energy Ministry approved the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program). Gazprom was appointed by the Russian Federation Government as the Program execution coordinator.

 Pursuant to Russian Prime Minister Vladimir Putin's assignments of March 2011, Gazprom in cooperation with the relevant ministries and regional executive authorities is updating the Program with due consideration of forecasted economic development of Eastern Russia and the need to create a lot of gas processing facilities.

 At present, Gazprom holds subsurface licenses and is performing geological exploration in the Republic of Sakha (Yakutia), the Krasnoyarsk and Kamchatka Krais, the Irkutsk Oblast, offshore the Sakhalin Island and Western Kamchatka.

 Based on the results of the geological exploration performed between 2009 and 2010, Gazprom incremented the Kirinskoye gas and condensate field's reserves from 75 billion cubic meters of C1+C2 reserves to 137 billion cubic meters of C1 reserves on the Sakhalin shelf. In 2010 Gazprom discovered the Yuzhno-Kirinskoye field containing 260 billion cubic meters of C1+C2 gas reserves at the Kirinsky Block of the Sakhalin III project. In addition, the Company launched 3D seismic survey at the Ayashsky Block of the Sakhalin III project.

 In the Kamchatka Krai Gazprom carries on implementing the project aimed at supplying natural gas to the region. Pre-development of the Kshukskoye and Nizhne-Kvakchikskoye fields on the west coast of the Kamchatka Peninsula is underway. The Kshukskoye field will reach its nominal capacity of 175 million cubic meters per year in 2011. Besides, Phase 1 of the Nizhne-Kvakchikskoye field will be brought into pilot production in the third quarter of 2011. The ongoing work will increase gas supplies to the facilities of Petropavlovsk-Kamchatsky and secure gas supplies to other consumers of the Kamchatka Krai.

 In 2010 Gazprom carried out seismic survey, defined the most promising areas for exploration on the Western Kamchatka shelf and elaborated a geological exploration program until 2014. In 2011 Gazprom will start drilling of prospecting wells in the Kamchatka shelf.

 In Yakutia Gazprom carries on geological exploration in the Chayandinskoye oil and gas condensate field. In 2010 the Federal Subsurface Use Agency approved the Development Plan for the Chayandinskoye field providing for the annual gas production in the amount of 25 billion cubic meters. At present, elaboration of the Investment Rationale covering the field pre-development and construction of gas transmission and processing capacities is nearing completion. It is projected to bring the Chayandinskoye field oil rim into development in 2014 and the gas deposits – in 2016.

 Geological exploration in Krasnoyarsk Krai resulted in discovery of the Abakanskoye gas field in 2010.

 In the Irkutsk Oblast Gazprom acquired the assets of RUSIA Petroleum in 2011. This will entitle the Company to receive the subsurface use license for the Kovykta gas and condensate field. In addition, Gazprom purchased Kovyktaneftegaz, the owner of the subsurface use license for the Khadinsky licensed area in the Irkutsk Oblast.

 Sakhalin – Khabarovsk – Vladivostok is a top-priority gas trunkline system of the Eastern Gas Program. By now, the pipeline's linear part has almost been welded up, the Sakhalin main compressor station is being constructed. The first GTS startup complex will have the length of 1,350 kilometers and the throughput capacity of 6 billion cubic meters per year. The first GTS startup complex is to be commissioned in the third quarter of 2011.

 Bringing onstream the Sobolevo – Petropavlovsk-Kamchatsky gas trunkline in 2010 was a crucial event in the area of gas supply and gasification of Eastern Russia. Natural gas from the Kshukskoye field started arriving in the region's capital. The CHPP-2 of Petropavlovsk-Kamchatsky was the first gas consumer. The gas pipeline was built within the shortest term possible. The Kamchatka gas supplies to consumers will significantly reduce the local dependence on the fuels brought in from beyond the region and guarantee energy security for years to come.

 In March 2011 Gazprom put onstream the top-priority gas supply and gasification facilities in the Sakhalin Oblast to supply natural gas to Yuzhno-Sakhalinsk: the Dalneye gas distribution station (GDS), a gas lateral from the Southern product transfer point of the Sakhalin II project to the Dalneye GDS as well as an inter-settlement gas pipeline between the Dalneye GDS to CHPP-1. Gazprom carries on construction of an inter-settlement gas pipeline from the Dalneye GDS to the Novo-Alexandrovsk settlement as well as developing the design and estimate documents for an inter-settlement gas pipeline from Novo-Alexandrovsk to the Klyuchi, Sinegorsk and Sanatornoye population centers.