Vladimir Putin, President of the Russian Federation and Alexey Miller, Chairman of the Gazprom Management Committee had a working meeting today.

The meeting addressed the Company’s activities in the domestic and international markets. In particular, very positive trends in the area of export gas supplies were pointed out. For instance, in May 2015 Germany, major importer of Russian gas, increased its purchases by 68 per cent as compared to May 2014. Alexey Miller stressed that Gazprom could rapidly build up gas production and fully meet the peak demand of Russian and foreign consumers and that it secured the 100 per cent reliability of supply.

Alexey Miller informed Vladimir Putin about the status of the Power of Siberia project (eastern route of gas supply to China), which was advancing in strict compliance with the schedule as well as the progress with the pre-contractual activity on the western route.

Special attention was paid to Gazprom’s efforts on Russian regions gasification. Thus, since 2005 the rural gasification level has grown by more than 20 per cent – to 54.6 per cent (Russia’s average gasification level being 65.4 per cent).

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Verbatim record

Vladimir Putin: Mr. Miller, the Company hasn’t summed up the results of the first half-year period, but you have the results of the first quarter, the trends are clear. That’s my first question.

The second one is about gasification, which is a great concern of our citizens. What is the general progress in the domestic market and how things are going in our traditional foreign markets? And could you please say a few words about the major projects.

Alexey Miller: The gas market environment in 2015 is much better than in late 2014, it is proven by gas supplies to the market. As for the domestic market, we observe a minor growth in consumption there. As for the gas export, the trends are very positive in this area. For example, such a major consumer of Russian gas as Germany, which is our number-one market, increased its purchases of Russian gas by more than 68 per cent this May as compared to May 2014. This points to the fact that the demand for Russian gas is growing and there is no doubt that the issue of new contacts on long-term Russian gas supplies to the European market is on the agenda of talks with our European partners.

Last year, in 2014 Gazprom produced 444 billion cubic meters of gas, while the Company’s production capacities total 617 billion cubic meters of gas, but that is what allows Russia seamlessly passing the autumn/winter period and satisfy all peak demands, which may occur in case of abnormally cold snaps.

Vladimir Putin: Are you able to rapidly build up gas production?

Alexey Miller: Yes, we are able to rapidly build up production and fully satisfy the peak demand of both our Russian and foreign consumers and, therefore, we secure totally reliable and uninterrupted supplies.

Vladimir Putin: What’s the progress with the major projects?

Alexey Miller: As for the major projects, there is no doubt that nowadays our key project is Power of Siberia. We started the construction last year. Mr. Putin, you gave a command to begin the construction of this gas pipeline. We are on the schedule, there are no problems at all, things are running smoothly.

The Chinese party made the decision to initiate the construction of their section, and in late June a festive ceremony of starting the gas pipeline construction in China will take place.

I visited China and met with Mr. Zhang Gaoli, First Vice Premier of China. We held talks, where we also touched upon the issue of preparing a contract on the western route. On May 8 we signed in your presence and in the presence of the Chinese leader the Heads of Agreement on gas supply to China, i.e. the contract on the western route.

More than ten contract articles have already been legally finalized, for instance, a 30-year term of gas supply to China, annual contractual volumes – 30 billion cubic meters, construction period; certain quality specifications of gas supply to China have been established. That is to say, the foundation, the basis of the future contract has been laid.

Comparing the schedule of negotiations on the western route with the similar schedule concerning the eastern route, back then it took us about eight or nine months additionally to end up signing the contract. But in the course of the negotiations in China we agreed on stepping up our activity and giving a necessary momentum to the talks. Moreover, the experience we gained negotiating the eastern route will certainly come useful now. After all, certain provisions and articles of the existing contract may be applied to the western route as well.

Vladimir Putin: How is it going with the gasification of Russia?

Alexey Miller: In 2015 we will maintain the program’s gasification pace and the allocations volume at the level of 2014 by investing over RUB 28 billion into it. Last year over 1,400 kilometers of inter-settlement gas pipelines were laid, 236 localities were supplied with gas. In the meantime, since the start of the Gasification Program – you launched it in 2005 – more than 3,510 localities have been supplied with gas and over 25 thousand kilometers of inter-settlement gas pipelines have been laid.

It allowed us to achieve the following gasification levels across the country: the average gasification level throughout Russia totals 65.4 per cent. The gasification of urban areas and urban-type localities stands at 70.3 per cent. It is remarkable that the rural area gasification level amounts to 54.6 per cent. You set a task to give priority to rural gasification: since 2005 the build-up in rural gasification within the program has exceeded 20 per cent.

We have completed the gasification by two-thirds. For our enormous country (and we should bear in mind that there are some remote localities) this is a very decent level. Though it is clear, of course, that in some regions we need to bring gasification to a 100 per cent level. In particular, this concerns Central Russia, and in some Russian constituents we have already reached this level. Here I would like to name the Belgorod Region and Tatarstan. But surely, when we talk about Central Russia we understand that here the bar is the highest with regard to gasification of urban areas, urban-type localities and rural areas.

Nowadays we have launched gasification activities in Eastern Siberia and the Far East within the Eastern Gas Program, and it also includes the Power of Siberia gas pipeline project. Besides, we are implementing the gasification program in cooperation with the Russian constituents the pipeline will pass through.

Vladimir Putin: Good.