GAZPROM MANAGEMENT APPROVES DRAFT GAZPROM STRATEGY FOR LNG PRODUCTION AND SUPPLY SECTOR

The Management Committee approved a draft Gazprom Strategy for the Liquefied Natural Gas Production and Supply Sector and ordered to submit it for the Gazprom Board of Directors’ approval.

As it was underscored, intensive expansion of the LNG segment was a crucial development factor for Gazprom as a global energy company. The Strategy implementation will allow the Company to become a leader on the LNG market.

Reference;

In recent years the global LNG sector has undergone rapid development. LNG trading volumes grew to 189 bcm in 2005 doubling since the early 1990-s. The LNG market is projected to experience a further two-fold expansion by 2015, which will be primarily driven by bigger needs in natural gas imports in the USA, Great Britain and Asia-Pacific.

Deliveries of gas in the liquefied form have an advantage in terms of a broad market geography.

Developing LNG production and export will make it possible to:

• realize the gas reserve potential with a maximum economic effect, including to remote sales markets;
• obtain positions in new regions (North America, Spain, Asia-Pacific as well as South America, India in the long-term);
• become a world (not only regional) energy supply centre and global energy security guarantor.

Gazprom’s strategic tasks in the LNG production and supply sector are as follows:

• organizing an efficient LNG production and supply system with the use of modern technologies;
• diversifying deliveries and expanding the scope of sales markets;
• occupying leading positions on the LNG market.

Since 2004 Gazprom has been pursuing a by-stage strategy of reinforcing its standing on the LNG market. Stage 1 of the Strategy (spot deals and LNG/pipeline gas swaps) saw liquefied natural gas deliveries to the USA, Great Britain, South Korea, Japan as well as Mexico and India, with a total of 0.85 bcm sold.